JS Inc. has an expected return of 13% and Beta = 1.2 DS Corp has an...
Waffle House Inc. has a beta of 1.2, the expected return on the market is 13, and the risk-free rate is 2.8. What is the expected return on this stock?
26 Analysis by a UCGF team has provided the following results 27 28.1 a risk free rate 29 risk aversion coefficient 30market portfolio 6.0% 2.5 18.5% Standard deviation of 31 Calculate the equilibrium risk 2premium Calculate the expected rate of return on the market 35 36 37b another team has determined that the risk aversion coeff is 3.25 what does that suggest for the expected rate return on the market? 40 41describe your conclusion in words 4 c the risk...
Stock XYZ has an expected rate of return of 8% and risk of B= 0.40. Stock ABC has an expected return of 15% and B=1.30. The markets return is 12% and the risk free rate is 4% A) According to CAPM, Which stock is a better buy? B) What is the alpha on each stock? Plot the SML and each and each stocks risk-return point on one graph. Label everything appropriately and show the alphas graphically
Stock X has systematic risk of β = 1 and the analyst forecasts its return to be 12%. Stock Y has β = 1.5 and a forecast return of 13%. The market portfolio’s expected return is 11%, and rf = 5%. i. According to the CAPM, what are the required returns of the two stocks? ii. What is the alpha of each stock? Which stock is a better buy? iii. Draw the SML. Mark each stock’s CAPM required rate of...
Stock A has an expected return of 11 percent, a beta of 0.9, and a standard deviation of 15 percent Stock B also has a beta of 0.9, but its expected returm is 9 percent and its standard deviation is 13 percent. Portfolio AB has $900,000 invested in Stock A and $300,000 invested in Stock B. The correlation between the two stocks' returns is zero. Which of the following statements is CORRECT? Select one O a.I am not sure b....
KAPLAN SCHWESER Kaskin, Inc., stock has a beta of 1.2 and Quinn, Inc., stock has a beta of.6. Which of the following statement:s is most accurate?(LO 7-1) a. The expected rate of return will be higher for the stock of Kaskin, Inc., than that of Quinn, Inc. b. The stock of Kaskin, Inc., has more total risk than Quinn, Inc c. The stock of Quinn, Inc., has more systematic risk than that of Kaskin, Inc. 8 Which of the following...
A- if a stock has Alpha=.004, and Beta =1.2 find the expected percent return if the market increases by 2%. If the actual return is 2%, 3%, or 4%, calculate the abnormal returnIf the actual return is 2%, 3%, or 4%, calculate the abnormal return.
Stocks A and B each have an expected return of 12%, a beta of 1.2, and a standard deviation of 25%. The returns on the two stocks have a correlation of 0.6. Portfolio P has 50% in Stock A and 50% in Stock B. Which of the following statements is CORRECT? Portfolio P has a beta that is greater than 1.2. Portfolio P has a standard deviation that is greater than 25%. Portfolio P has an expected return that is...
The beta for Cowboy Industries, Inc. is 1.2. The expected return on the market portfolio is 14.0% and the risk-free rate is 3.0%. If the CAPM/SML is correct, what is Cowboy Manufacturing’s required (expected) return? Group of answer choices 16.2% 13.8% None of these are correct. 12.9% 11.1%
13. Using CAPM (LO1, 4) A stock has a beta of 1.15, the expected return on the market is 10.3 percent, and the risk-free rate is 3.8 percent. What must the expected return on this stock be?