Question

Assiume the betas tor secuities A, B, and C are as shwn here a. Calaiate the change in return lor each security it the market experiences an inrease in its rate at return of 17 B% over the next period b. Calculate the change in return for each security itthe market experiences a decrease in its rate of return of 10.9% over the next penod c. Rank and discuss the relative risk of each security on the basis of your findings. Which security might perform best during an economic downturm? Explain.Data Table a. Calculals lheじmange in return lo' each security ifthe markel experences an inu ease m lls rale of 'Blum of 12.8 uve' lhe nexl period. Security A's change in return will be | %- (Round to two decimal places ) Secu' ily B's ch rue in return will be 26. (Round 10 Iwo ducimal places) Security C s change in 'utuin will be, %. b. Calculate the change n return for each security if the market experiences a decrease in its rate of return of 10.9% over the next period Security A's change in return will be % (Round to two decimal places) Security B's change in return will be | %· (Round to two decimal places ) Security C's change in return will be c. Rank and discuss thic rclalve risk of cach scourity on the basis of your findings Which sccurity might pero best during an economic downturm? Explain (Sclec the best choicc bclow. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Security Beta 1.12 0.83 0.88 (Round lowo deuinal places.) Print Done Round to two decimal places.) OA. Duning an economic downturn, it can probably be assumed that the market return woukd decrease It this cccurred, security C would pertom best Otnerwise, secunty H would be best since t would be least respansive to a change in the market retum ○ B. Security B IS the least risky Since its return is least responsive regardless ot direction) to changes in the market return ecurilyAis hB rn sl sky. I has the h hes re uvanli sk as determined by he b la values ard ihe gies e' changes r' securily A's 'Blu' n or 려 grven diange in l 、markel 'elum O D. Socurity C coukd be called delensivc since it movcs in thc opposite direction fromthe market (its relurn incraed when the market return ell and vice rsa)

Answer 1

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