Question

Agsume the betas for securities A, B, and C are as shown here ·Calculate the change in return for each security if the market experiences an increase in its rate of return af 13 4% over the next period b. Calculate the change in return for ach security if the market experiences a decrease in its rate of return of 10 6% over the next period c. Rank and discuss the relative risk of each security on the basis of your findings. Which security might perform best during an economic downturn? Explain. Data Table a. Calculate the change in return for each security if the market experiences an increase in its rate of return of 13.4% over the next period. Security A's change in return wil be D% (Round to two decimal places) Security B's change in return will be Security C's change in returm will be b. Calculate the change in return for each security if the market experiences a decrease ints rate of return of 10.8% over the next period. Security A's change in raturn will be Security B's change in return will be Security C's change in return will be D% (Round to two decimal places ) c. Rank and discuss the ralative risk ofeach security on the basis of your findings. Which security might perform best during an economic downturn? Explain. Selac the best choice below) Click on the icon locatad on the top-right corner of the data table below in order to copy is contents into a spreadsheet.) (Round to two decimal places.) Beta D% (Round to two decimal places) 145 0.78 -094 D% (Round to two decimal places) (Round to two decimal places.) Print Done OA. Security B is the least risky since its retum is least responsive (regardless of direction) to changes in the market retum. 。B. unng an economic downturn it can probably be assume that the market ret m would decrease this occurred, security would perform bast rhen ise secur B would be best since 。C. ecurity A s the most risk it has the highest relevant s as determined by the beta values and the greater changes security A's return or a given change in the market return. ○ D Security C could be called defens ve srce it moves in the opposite direction fro m the market its return increased when the market return fall and vica versa O E. Al the above statements are correct. would be least esponsive to a change in a market turn

Answer 1

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