CPAM model is the best description of the data. Because the Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for assets, particularly stocks. CAPM is widely used throughout finance for pricing risky securities and generating expected returns for assets given the risk of those assets and cost of capital.
The beta of a potential investment is a measure of how much risk the investment will add to a portfolio that looks like the market. If a stock is riskier than the market, it will have a beta greater than 1. If a stock has a beta of less than one, the formula assumes it will reduce the risk of a portfolio.
Exercise 1 Consider the following APT-style model: where rA and rM are excess returns on, respectively,...
Please answer
Which of the following statements about the Arbitrage Pricing Theory (APT) are correct? Check all that apply The APT is more general than the Capital Asset Pricing Model (CAPM) The APT maintains that the realized return on any stock depends on changes unique to the firm. The APT model maintains that the realized returns on stocks depend on unexpected changes in fundamental economic factors The APT identifies all relevant factors that affect the realized returns on stocks Imani,...
9. The Arbitrage Pricing Theory Which of the following statements about the Arbitrage Pricing Theory (APT) are correct? Check all that apply. The APT is more restrictive than the Capital Asset Pricing Model (CAPM). The APT assumes that all investors hold the market portfolio The APT does not identify the relevant factors. The APT does not restrict the number or nature of the factors relevant to the determination of a stock's return. Karine, an analyst at Graffiti Aviation (GA), models...
please answer all them, i have enough questions left! ?
question #1 please :)
Examples on Asset Pricing Models 25 (2-2)(RA) = 12.2%; EOR 1. You are given the following equilibrium expected returns and risks: 3.7 (RM-Red E(RA) = 12.2%; E(RB) = 15.5%; Ba=0.7; BB = 1.25. ER2=0.08 +0.06 Bi a. What is the equation of the Security Market Line? b. A portfolio, made up of A (above) and another security, has a beta of 1.10 and expected return of...
The question asks: what model would you use? Briefly
describe why you would use this model. What concerns, if
any, would you have about the effectiveness of your model? Provide
your responses and your justification in the space
below.
Attached is the output of linear regression. my first thoughts
are that my other choices are higher order regression models. how
do I figure this out?
SUMMARY OUTPUT Regression Statistics Multiple R 0.87402183 R Sqae 0.76391416 Adjusted RS 0.7048927 Standard Erro...
question 2
Examples on Asset Pricing Mode 1. You are given the following equilibrium expected returns and risks 7 (R- es-2 E(RA)- 12.2 % ; E(Ra)-15.5 % ; Ba-1.25 BA-0.7; .£{{¢*6,4 *రి 6 a What is the equation of the Security Market Line? b. A portfolio, made up of A (above) and another security, has a beta of 1.10 and expected return of 13 %. Which one would you rather buy- A alone or the portfolio? Why? (R) 4-6 7...
please answer question 4
Examples on Asset Pricing Models 1. You are given the following equilibrium expected returns and risks -07: 12 ke (RA) - 12.296; E(R) -15.556; No. 0. 015 a. What is the equation of the Security Market Line? b. A portfolio, made up of A (above) and another security, has a beta of 1.10 and expected return of 1396Which one would you rather buy - A alone or the portfolio? Why? ES 1.6 I OVAL B A...
please answer question #1
7 1. You are given the following equilibrium expected returns and risks E(R) - 12.2%; E(Re) - 15.5% BA -0.7; Be-1.25. c( 0.460.0615 a. What is the equation of the Security Market Line? b. A portfolio, made up of A (above) and another security, has a beta of 1.10 and expected return of 13%. Which one would you rather buy - A alone or the portfolio? Why? Ee19. 6 - OVAL BYA c. Given the SML...
Need help with stats true or false questions
Decide (with short explanations) whether the following statements are true or false a) We consider the model y-Ao +A(z) +E. Let (-0.01, 1.5) be a 95% confidence interval for A In this case, a t-test with significance level 1% rejects the null hypothesis Ho : A-0 against a two sided alternative. b) Complicated models with a lot of parameters are better for prediction then simple models with just a few parameters c)...
2. Use the data in hpricel.wfl uploaded on Moodle for this exercise. We assume that all assump- tions of the Classical Linear Model are satisfied for the model used in this question. (a) Estimate the model and report the results in the usual form, including the standard error of the regression. Obtain the predicted price when we plug in lotsize - 10, 000, sqrft - 2,300, and bdrms- 4; round this price to the nearest dollar. (b) Run a regression...