ZuoTi.Pro
Question

A stock has a standard deviation of 32.00% and a correlation with the overall market of...

A stock has a standard deviation of 32.00% and a correlation with the overall market of 0.41. If the market portfolio has a standard deviation of 29.00%, what is the Beta for the stock? Submit Answer format: Number: Round to: 2 decimal places.

A stock has a Beta of 1.39. The current risk free rate in the economy is 2.60%, while the market portfolio risk premium is 6.00%. What is the risk premium for holding this stock?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Beta = standard deviation of the stock / standard deviation of the market *  correlation of stock with the market

= 32 / 29 * 0.41

=0.45

Hence the correct answer is 0.45

---------

Risk premium for holding the stock= market risk premium * beta

= 6% * 1.39

= 8.34%

Hence the correct answer is  8.34%

0 0
Add a comment
Know the answer?
Add Answer to:
A stock has a standard deviation of 32.00% and a correlation with the overall market of...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A stock has a correlation with the market of 0.46. The standard deviation of the market...

    A stock has a correlation with the market of 0.46. The standard deviation of the market is 29%, and the standard deviation of the stock is 37%, what is the stock's beta? 1.70 0.59 0.36 0.41

  • An investor is looking at a stock that has four possible values in the next year....

    An investor is looking at a stock that has four possible values in the next year. The probabilities and returns are shown below. OUTCOME: Probability Return Strong Economy 0.24 25.00% Good Economy 0.26 10.00% Poor Economy 0.32 0.00% Recession 0.18 -11.00% What is the standard deviation of these returns based on the probabilities? Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924)) #10 A...

  • An investor has constructed a portfolio with the following investments: ASSET: DOLLARS INVESTED: BETA: Apple $15,000.00...

    An investor has constructed a portfolio with the following investments: ASSET: DOLLARS INVESTED: BETA: Apple $15,000.00 1.40 Kelloggs $5,000.00 0.20 S&P 500 Index $20,000.00 1.00 The current risk free rate in the economy is 4.00%, while the market portfolio risk premium is 6.00%. What is the beta for this portfolio? Submit Answer format: Number: Round to: 2 decimal places. #12 An investor has constructed a portfolio with the following investments: ASSET: DOLLARS INVESTED: BETA: Apple $15,000.00 1.40 Kelloggs $5,000.00 0.20...

  • EXTRA RISK PROBLEMS Stock A Stock B Expected Return 10% 16% Standard Deviation Correlation coefficient with...

    EXTRA RISK PROBLEMS Stock A Stock B Expected Return 10% 16% Standard Deviation Correlation coefficient with the Market Correlation coefficient with Stock B Risk free rate 25% Expected return on the Market 12% Standard deviation of the Market 18 1. What is the expected return on a portfolio comprised of $6000 of Stock A and $4000 of Stock B? 2. What is the Standard deviation of this portfolio? 3. Does it make sense to combine these two in this way?...

  • 4) The stock of Ralph's Restaurants has a standard deviation of 70% and has a correlation...

    4) The stock of Ralph's Restaurants has a standard deviation of 70% and has a correlation with the market of 0.40. The expected return for the market is 13% and it has a standard deviation of 20%. Currently the risk-free rate of return is 5%. 4a. What is the beta for Ralph's Restaurants? 4b. What is the required return for Ralph's Restaurants? 4c. What is the expected return for Ralph's restaurants in equilibrium? 4) The stock of Ralph's Restaurants has...

  • Stock A has a standard deviation of 20 percent and a correlation coefficient of 0.64 with...

    Stock A has a standard deviation of 20 percent and a correlation coefficient of 0.64 with market returns. The expected return of the market is 12 percent with a standard deviation of 15 percent. The risk-free rate is 5 percent. What is the beta of Stock A?

  • A stock has a correlation with the market of .45. The standard deviation of the market...

    A stock has a correlation with the market of .45. The standard deviation of the market is 21%, and the standard deviation of the stock is 35%. a. What is the covariance between the market and the stock? (This part is related to Chapter 6, correlation.) b. Calculate the stock beta.

  • Portfolio B has a standard deviation of 12% and a correlation with the market of 0.85....

    Portfolio B has a standard deviation of 12% and a correlation with the market of 0.85. If the standard deviation of the market is 15%, what is the beta for B? a. 0.54 b. 0.68. c. 0.80. d. Not enough information to determine. Which of the following statements is not correct? a. Correlation ranges from-1 to +1. b. Coefficient of determination ranges from 0 to +1. c. Covariance equals: Standard deviation for A times standard deviation for B divided by...

  • EXTRA RISK PROBLEMS Stock A Stock B Expected Return 10% 1 Standard Deviation Beta Correlation coefficient with the...

    EXTRA RISK PROBLEMS Stock A Stock B Expected Return 10% 1 Standard Deviation Beta Correlation coefficient with the Market Correlation coefficient with Stock B Risk free rate 25% Expected return on the Market 12% Standard deviation of the Market 18 1. What is the expected return on a portfolio comprised of $6000 of Stock A and S4000 of Stock B? 2. What is the Standard deviation of this portfolio? 3. Does it make sense to combine these two in this...

  • 2. Consider the information in Table1. Table 1 Standard Deviation of Stock Stock Correlation with Market...

    2. Consider the information in Table1. Table 1 Standard Deviation of Stock Stock Correlation with Market Portfolio 0.75 0.20 Stock 20% 15% 14% 0% 49% ected Market Return Risk Free Rate Return (a) Consider Table 1 . Calculate betas for Stock 1, Stock 2, and a portfolio consisting of 75% invested in Stock 1 and (b) Consider Table 1. Compute the equilibrium expected return according to the CAPM for Stock 1, Stock 2, and the (c) Consider Table 1 and...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT