Homework Answers
Ans 0.430
| ALPHA OF STOCK = | EXPECTED RETURN* (Risk free Return + Market Risk Premium* Beta) |
| 10%*(2.5%+ 4.5%*0.4) | |
| 0.430% |
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Problem 9 Intro You've analyzed IBM's stock and your personal expectation is that it will deliver...
Problem 17 Intro You've assembled the following portfolio: Stock Beta Portfolio weight The expected market return...
Problem 17 Intro You've assembled the following portfolio: Stock Beta Portfolio weight The expected market return is 5% and the risk-free rate is 2%. Assume that the CAPM holds. Part 1 Attempt 1/5 for 10 pts. What is the beta of the portfolio? 2+ decimals Submit VB Attempt 1/5 for 10 pts. Part 2 What is the expected return of your portfolio? 3. decimals Submit
Problem 17 Intro You've assembled the following portfolio: Stock Beta Portfolio weight 1 1.6 0.2 2...
Problem 17 Intro You've assembled the following portfolio: Stock Beta Portfolio weight 1 1.6 0.2 2 1.1 3 0.7 0.5 The expected market return is 9% and the risk-free rate is 2%. Assume that the CAPM holds. i | Attempt 1/5 for 10 pts. Part 1 What is the beta of the portfolio? No decimals Submit Part 2 IB Attempt 175 for 10 pts. What is the expected return of your portfolio? 3+ decimals Submit Intro We know the following...
Problem 8 Intro A stock has a beta of 1.4. The risk-free rate is 2%. Assume...
Problem 8 Intro A stock has a beta of 1.4. The risk-free rate is 2%. Assume that the CAPM holds. Part 1 18 Attempt 1/10 for 10 pts. What is the expected return for the stock if the expected return on the market is 11%? 3+ decimals Submit IB Attempt 1/10 for 10 pts. Part 2 What is the expected return for the stock if the expected market risk premium is 11%? 3+ decimals Submit
Problem 3 Intro You've estimated the following expected returns for a stock, depending on the strength...
Problem 3 Intro You've estimated the following expected returns for a stock, depending on the strength of the economy: State (s) Probability Expected return Recession 0.3 -0,05 Normal Expansion 0.5 0.06 0.2 0.11 Attempt 1/10 for 10 pts. Part 1 What is the expected return for the stock? 4+ decimals Submit Attempt 1/10 for 10 pts. Part 2 What is the standard deviation of returns for the stock? 4+ decimals Submit
Problem 16 Intro Use the expected return-beta equation from the CAPM. Part 3 IB - Attempt...
Problem 16 Intro Use the expected return-beta equation from the CAPM. Part 3 IB - Attempt 2/5 for 10 pts. What is beta if the risk-free rate is 3%, the expected return 12% and the expected market return 9%? 2+ decimals Submit 18 | Part 4 Attempt 1/5 for 10 pts. What is the expected market return if the risk-free rate is 3%, beta 1 and the expected return 12%? 3+ decimals Submit
Problem 9 Intro You have $100,000 to invest and want to choose between two stocks and...
Problem 9 Intro You have $100,000 to invest and want to choose between two stocks and the risk-free asset. Security Stock 1 Stock 2 Risk-free asset E() 0.0881 0.0807 0.04 Beta Investment 1.3 $20,000 1.1 ? You want your portfolio to be as risky as the market overall. Part 1 Attempt 1/5 for 10 pts. What is the expected return of your portfolio? 3+ decimals Submit
Problem 2 Intro We know the following expected returns for stocks A and B.glven different states...
Problem 2 Intro We know the following expected returns for stocks A and B.glven different states of the economy: 0.04 State (s) Probability E(ra) Ers,s) Recession 0.2 -0.1 Normal 0.5 0.08 0.05 Expansion 0.3 0.18 0.07 - Attempt 1/5 for 10 pts. Part 1 What is the expected return for stock A? 3+ decimals Submit Attempt 175 for 10 pts. Part 2 What is the expected return for stock B? Submit Problem 9 Intro You have $100,000 to invest and...
Intro The table below shows information for 3 stocks. Security Beta Risk-free rate Expected market return...
Intro The table below shows information for 3 stocks. Security Beta Risk-free rate Expected market return 1.8 Stock 1 0.02 0.06 1.2 Stock 2 0.035 0.06 Stock 3 0.4 0.015 0.06 The risk-free rates are different because they were measured in different years. Calculate the expected (or required) return for each stock, using the Capital Asset Pricing Model (CAPM). Part 1 B Attempt 1/5 for 10 pts. What is the expected return for stock 1? 3+ decimals Submit Part 2...
Intro You've estimated the following expected retums for a stock, depending on the strength of the...
Intro You've estimated the following expected retums for a stock, depending on the strength of the economy Probability Expected return 02 -0.02 State (s) Recession Normal Expansion 0.5 0,09 0.3 0.14 Attempt 1/1 for 10 pts. Part 1 What is the expected return for the stock? 3+ decimals Submit Part 2 Attempt 1/1 for 10 pts What is the standard deviation of returns for the stock? Type here to search O
Problem 18 Intro We know the following expected returns for stock A and the market portfolio,...
Problem 18 Intro We know the following expected returns for stock A and the market portfolio, given different states of the economy: State (s) Recession Normal Expansion Probability E(ras) E(TM,s) | 0.2 -0.06 0.02 0.5 0.09 0.05 0.3 0.17 0.09 The risk-free rate is 0.02. Part 1 IB - Attempt 3/5 for 10 pts. Assuming the CAPM holds, what is the beta for stock A? 2+ decimals Submit
Problem 17 Intro You've assembled the following portfolio: Stock Beta Portfolio weight The expected market return is 5% and the risk-free rate is 2%. Assume that the CAPM holds. Part 1 Attempt 1/5 for 10 pts. What is the beta of the portfolio? 2+ decimals Submit VB Attempt 1/5 for 10 pts. Part 2 What is the expected return of your portfolio? 3. decimals Submit
Problem 17 Intro You've assembled the following portfolio: Stock Beta Portfolio weight 1 1.6 0.2 2 1.1 3 0.7 0.5 The expected market return is 9% and the risk-free rate is 2%. Assume that the CAPM holds. i | Attempt 1/5 for 10 pts. Part 1 What is the beta of the portfolio? No decimals Submit Part 2 IB Attempt 175 for 10 pts. What is the expected return of your portfolio? 3+ decimals Submit Intro We know the following...
Problem 8 Intro A stock has a beta of 1.4. The risk-free rate is 2%. Assume that the CAPM holds. Part 1 18 Attempt 1/10 for 10 pts. What is the expected return for the stock if the expected return on the market is 11%? 3+ decimals Submit IB Attempt 1/10 for 10 pts. Part 2 What is the expected return for the stock if the expected market risk premium is 11%? 3+ decimals Submit
Problem 3 Intro You've estimated the following expected returns for a stock, depending on the strength of the economy: State (s) Probability Expected return Recession 0.3 -0,05 Normal Expansion 0.5 0.06 0.2 0.11 Attempt 1/10 for 10 pts. Part 1 What is the expected return for the stock? 4+ decimals Submit Attempt 1/10 for 10 pts. Part 2 What is the standard deviation of returns for the stock? 4+ decimals Submit
Problem 16 Intro Use the expected return-beta equation from the CAPM. Part 3 IB - Attempt 2/5 for 10 pts. What is beta if the risk-free rate is 3%, the expected return 12% and the expected market return 9%? 2+ decimals Submit 18 | Part 4 Attempt 1/5 for 10 pts. What is the expected market return if the risk-free rate is 3%, beta 1 and the expected return 12%? 3+ decimals Submit
Problem 9 Intro You have $100,000 to invest and want to choose between two stocks and the risk-free asset. Security Stock 1 Stock 2 Risk-free asset E() 0.0881 0.0807 0.04 Beta Investment 1.3 $20,000 1.1 ? You want your portfolio to be as risky as the market overall. Part 1 Attempt 1/5 for 10 pts. What is the expected return of your portfolio? 3+ decimals Submit
Problem 2 Intro We know the following expected returns for stocks A and B.glven different states of the economy: 0.04 State (s) Probability E(ra) Ers,s) Recession 0.2 -0.1 Normal 0.5 0.08 0.05 Expansion 0.3 0.18 0.07 - Attempt 1/5 for 10 pts. Part 1 What is the expected return for stock A? 3+ decimals Submit Attempt 175 for 10 pts. Part 2 What is the expected return for stock B? Submit Problem 9 Intro You have $100,000 to invest and...
Intro The table below shows information for 3 stocks. Security Beta Risk-free rate Expected market return 1.8 Stock 1 0.02 0.06 1.2 Stock 2 0.035 0.06 Stock 3 0.4 0.015 0.06 The risk-free rates are different because they were measured in different years. Calculate the expected (or required) return for each stock, using the Capital Asset Pricing Model (CAPM). Part 1 B Attempt 1/5 for 10 pts. What is the expected return for stock 1? 3+ decimals Submit Part 2...
Intro You've estimated the following expected retums for a stock, depending on the strength of the economy Probability Expected return 02 -0.02 State (s) Recession Normal Expansion 0.5 0,09 0.3 0.14 Attempt 1/1 for 10 pts. Part 1 What is the expected return for the stock? 3+ decimals Submit Part 2 Attempt 1/1 for 10 pts What is the standard deviation of returns for the stock? Type here to search O
Problem 18 Intro We know the following expected returns for stock A and the market portfolio, given different states of the economy: State (s) Recession Normal Expansion Probability E(ras) E(TM,s) | 0.2 -0.06 0.02 0.5 0.09 0.05 0.3 0.17 0.09 The risk-free rate is 0.02. Part 1 IB - Attempt 3/5 for 10 pts. Assuming the CAPM holds, what is the beta for stock A? 2+ decimals Submit
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