True/False questions A particular stock is characterized by a negative beta, but a large standard deviation...
True/False questions
A particular stock is characterized by a negative beta, but a large standard deviation two times that of a broad-based market index. Due to this stock's substantial total risk, we expect its return to exceed that of a risk-free asset.
The fact that over 1/4 of all professionally managed stock mutual funds are able to outperform the S&P 500 in a typical year, is evidence against the semi-strong form of market efficiency.
Homework Answers
Ans: True , As in semi-strong form of market many a time the investment decisions are taken by the individuals on there individual perception of a particular stock for example gold use to have a negative beta but gives a better returns as compare to other stocks.
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True/False questions
A particular stock is characterized by a negative beta, but a
large standard deviation...
True/false The fact that over 1/4 of all professionally managed stock mutual funds are able to...
True/false The fact that over 1/4 of all professionally managed stock mutual funds are able to outperform the S&P 500 in a typical year, is evidence against the semi-strong form of market efficiency.
6. Calculating a beta coefficient for a single stock Suppose that the standard deviation of returns...
6. Calculating a beta coefficient for a single stock Suppose that the standard deviation of returns for a single stock A IS A = 25%, and the standard deviation of the market return is on = 15%. If the correlation between stock A and the market is PAM - 0.6, then the stock's beta is prns against the market returns will equal the true value of Is it reasonable to expect that the beta value estimated via the regression of...
2. Answer the following questions: a. Calculate the variability (standard deviation) of the stock returns of...
2. Answer the following questions: a. Calculate the variability (standard deviation) of the stock returns of California REIT and Brown Group during the past 2 years. How variable are they compared with Vanguard Index 500 Trust? Which stock appears to be riskless? b. Suppose Beta's position had been 99% of equity funds invested in the index fund and 1% in the individual stock. Calculate the variability of this portfolio using each stock. How does each stock affect the variability of...
6. Calculating a beta coefficient for a single stock Aa Aa E Suppose that the standard...
6. Calculating a beta coefficient for a single stock Aa Aa E Suppose that the standard deviation of returns for a single stock A is A = 40%, and the standard deviation of the market return is OM = 20%. If the correlation between stock A and the market is PAM = 0.7, then the stock's beta is Is it reasonable to expect that the future expected return for a stock will equal its historical average return over a relatively...
Stock Expected Return Standard Deviation Beta < 8.94 % 16 % 0.8 10.23 16 1.1 0...
Stock Expected Return Standard Deviation Beta < 8.94 % 16 % 0.8 10.23 16 1.1 0 12.38 16 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What...
Someone who invests in the hedge funds could most accurately be described as using which approach?...
Someone who invests in the hedge funds could most accurately be described as using which approach? Multiple Choice Technical management Active management Arbitrage management Passive investment Which of the following contradicts the proposition that the stock market is semistrong-form efficient? Multiple Choice Over 25% of mutual funds outperform the market on average. Insiders earn abnormal trading profits. Applications of technical trading rules fail to earn abnormal returns. Every January, the stock market earns above-normal returns. Assume that a company announces...
ABC Company's stock has a beta of 1.95, the risk-free rate is 2.25%, and the market risk premium is 6.75%. What is A...
ABC Company's stock has a beta of 1.95, the risk-free rate is 2.25%, and the market risk premium is 6.75%. What is ABC's required rate of return using CAPM? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box. Ripken Iron Works believes the following probability distribution exists for its stock. What is the standard deviation of...
help pls Questions 21-27 are based on the following information. CAPM and stock valuation. Your aunt, Beth, plan...
help pls
Questions 21-27 are based on the following information. CAPM and stock valuation. Your aunt, Beth, plans to invest in the common stock of Smart-investment Corporation Knowing that you are studying finance, she asks for your suggestion. You calculation shows that yield on Treasury securities is 6%. You know that the S&P 500 Index's expected annual return is 14% Your coonometric model tells you that beta of this company's stock is 1.25. Aunt Beth tells you that this company...
(The following information applies to Questions 3 and 4) You observe the following information in a market where the CAPM holds: beta Expected return Annual standard deviation Stock A 1.5 15.0% 0.25 Stock B 1.2 13.2% 0.30 The correlation co
(The following information applies to Questions 3 and 4)You observe the following information in a market where the CAPM holds:betaExpected returnAnnual standard deviationStock A1.515.0%0.25Stock B1.213.2%0.30The correlation coefficient between stock A and the market is 60%. Question 3:Compute the expected return on the market portfolio.Question 4:What is the expected return of a portfolio that is split (perhaps unevenly) between the risk-free asset and the market, if this portfolio has a standard deviation of 0.07?
Dropdown options: 1-risk/return 2-equal to/greater or less than 3-self contained/stand-alone 4-variance/standard deviation 5-variance/beta coefficient 6-diversifiable/non-diversiable 7-is/...
Dropdown options:
1-risk/return
2-equal to/greater or less than
3-self contained/stand-alone
4-variance/standard deviation
5-variance/beta coefficient
6-diversifiable/non-diversiable
7-is/ is not
8-diversifiable/non-diversifiable
9-random/non random
10-decreasing/increasing
11-2000+/500
12-reduces/increases
13-systematic of market/unsystematic or company-specific
14-diversifiable/non diversifiable
1. Basic concepts - Risk and return Professor Isadore (Izzy) Invest-a-Lot retired two years ago from Exceptional College, a small liberal arts college in North Carolina after teaching corporate finance and investment theory for 35 years. Yesterday, Izzy appear on EC LIVE, a television show produced for the students,...
6. Calculating a beta coefficient for a single stock Suppose that the standard deviation of returns for a single stock A IS A = 25%, and the standard deviation of the market return is on = 15%. If the correlation between stock A and the market is PAM - 0.6, then the stock's beta is prns against the market returns will equal the true value of Is it reasonable to expect that the beta value estimated via the regression of...
6. Calculating a beta coefficient for a single stock Aa Aa E Suppose that the standard deviation of returns for a single stock A is A = 40%, and the standard deviation of the market return is OM = 20%. If the correlation between stock A and the market is PAM = 0.7, then the stock's beta is Is it reasonable to expect that the future expected return for a stock will equal its historical average return over a relatively...
Stock Expected Return Standard Deviation Beta < 8.94 % 16 % 0.8 10.23 16 1.1 0 12.38 16 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What...
help pls
Questions 21-27 are based on the following information. CAPM and stock valuation. Your aunt, Beth, plans to invest in the common stock of Smart-investment Corporation Knowing that you are studying finance, she asks for your suggestion. You calculation shows that yield on Treasury securities is 6%. You know that the S&P 500 Index's expected annual return is 14% Your coonometric model tells you that beta of this company's stock is 1.25. Aunt Beth tells you that this company...
Dropdown options:
1-risk/return
2-equal to/greater or less than
3-self contained/stand-alone
4-variance/standard deviation
5-variance/beta coefficient
6-diversifiable/non-diversiable
7-is/ is not
8-diversifiable/non-diversifiable
9-random/non random
10-decreasing/increasing
11-2000+/500
12-reduces/increases
13-systematic of market/unsystematic or company-specific
14-diversifiable/non diversifiable
1. Basic concepts - Risk and return Professor Isadore (Izzy) Invest-a-Lot retired two years ago from Exceptional College, a small liberal arts college in North Carolina after teaching corporate finance and investment theory for 35 years. Yesterday, Izzy appear on EC LIVE, a television show produced for the students,...
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