Beta measures only Systematic risk. So, there is no way to tell the total risk from the data available.
As the Beta is more than 1, it means that the systematic risk for J&X is more than the average firm.
Hence, Option "a" is correct.
Question 11 (1 point) The rate of return on U.S. T-bills is 3.25% and the expected...
Question 10 (1 point) The rate of return on U.S. T-bills is 3.25% and the expected return on the market i 9.50%. J&X, Inc. has a beta (b) of 1.48. What is the required return (r) for J&X? a) 8.18% Ob) 12.50% Oc) 10.50% Od) 4.68% e) 13.18% Previous Page Next Page Page 10 of 26
Suppose that the average excess return on stocks is 12.00% and that the risk-free interest rate is 3.00%. Compute expected returns to stocks with each of the following beta coefficients using the capital asset pricing model (CAPM): Hint: Do not forget to enter the minus sign if the value of the return to stock is negative.) Return to Stocks (%) 0.7 0.2 1.0 2.0 Based on the CAPM and your calculations for the return to stocks, what does it mean...
The risk-free rate of return is 3.25%,, the expected rate of return on the market portfolio is 13.75%, and the stock of ABC Corp has a beta of 1.3. ABC Corp pays out 35% of earnings in divdends, and the latest earnings announced were $7 per share. Dividends were just paid and are expected to be paid annually. You expect that ABC will earn an ROE of 18.50% per year on all reinvested earnings forever. 1. What is the intrinsic...
Assume that the risk-free rate is 9% and that the market portfolio has an expected return of 17%. Under equilibrium conditions as described by the CAPM, what would be the expected return for a portfolio having no diversifiable risk and a beta of 0.75?
Question 1 (14 marks) Assume the risk-free rate is 3% and the expected rate of return on the market is 10%. a. AXB stock is now selling for $45 per share. It will pay a dividend of $2 per share at the end of the year. Its beta is 1.3. What do you expect the stock to sell for at the end of the year? (4 marks) b. Peter is buying a firm with an expected perpetual cash flow of...
If the expected rate of return on the market portfolio is 13 percent and the T-bills yield is 6 percent, what must be the beta of a stock that investors expect to return 10 percent
1. If a stock has a market beta less than 1, the expected return will be less than expected return of market portfolio. True or False? 2. ABC, Inc., has a beta of 1.99. The risk-free rate is 3.45% and the market risk premium is 5.74%. What is the required rate of return on ABC's stock? Note: Convert your answer to percentage and round off to two decimal points. 3. Semi-strong-form efficient markets are not weak-form efficient. True or False?
2 If the expected rate of return on the market portfolio is 13% and T-bills yield 5%, what must be the beta of a stock that investors expect to return 10%? (Round your answer to 4 decimal places.) Beta of a stock
EVALUATING RISK AND RETURN Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = CVy = Which stock is riskier for...
8-3a Expected Portfolio Returns Calculate the expected return of the portfolio based on the following individual investments and its percentage of the total portfolio. Expected Return Weight -5.4% 10% 3% 23% 3.9% 20% 10% 0% 50% 20% B. 8-3b Portfolio Risk Based on the expected portfolio retums below, te expected return for the portfolio is 5.8% (you can check this). Calculate the standard deviation of the following portfolio: Expected Return Probability 10% 1% 8-3e Beta-Part 1 Returns on technology stocks...