Homework Answers
Required return as per CAPM is:-
=Risk free rate+beta*(Rm-Rf)
=8%+1.25*(15%-8%)
=16.75%
The answer is d) Undervalued by 1.00 percentage point
Add Answer to:
| 15% 34. An analyst collects the following data: Expected market return Risk free rate 8%...
+ 34. An analyst collects the following data: Expected market return 15% Risk free rate 8%...
+ 34. An analyst collects the following data: Expected market return 15% Risk free rate 8% Expected return on Stock X 17.75% Stock X's beta 1.25 Using these data and CAPM, which of the following statements about stock X is true? Overvalued by 1.75 percentage point Overvalued by 2.25 percentage point Properly valued Undervalued by 1.00 percentage point Undervalued by 3.25 percentage point
11. Assume that the Risk Free rate is 5% and the Expected Return on the market...
11. Assume that the Risk Free rate is 5% and the Expected Return on the market is 10%. Show if these stocks are under, over, or fairly valued. Illustrate it in a chart with the SML and the expected returns of the stocks. CAPM returnasseti RiskFree + [E(Rmarket)- Risk Free] Basset i Security САРМ Over/Under E(Return) Beta Return |Valued? Stock W Stock Y Stock Z 0.035 0.85 1.2 0.095 0.12 1.1 Show (and explain) your results in the following chart....
Carole Corp’s stock has a beta of 1.25, expected return of 8.5%, current market price of...
Carole Corp’s stock has a beta of 1.25, expected return of 8.5%, current market price of $32, and intrinsic value of $46. Which of the following is true? The stock has no idiosyncratic risk. The stock is fairly valued. The stock is overvalued. There is not enough information to make a decision. The stock is undervalued.
6. Portfolio beta and weights Aa Aa Brandon is an analyst at a wealth management firm....
6. Portfolio beta and weights Aa Aa Brandon is an analyst at a wealth management firm. One of his clients holds a $5,000 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Investment Allocation Beta Standard Deviation 38.00% 35% 0.750 Stock Atteric Inc. (AI) Arthur Trust Inc. (AT) Lobster Supply Corp. (LSC) Baque Co. (BC) 20% 1.600 42.00% 15% 1.200 45.00% 30%...
Stock A has an expected return of 11 percent, a beta of 0.9, and a standard deviation of 15 perce...
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....
Assignment 08 - Risk and Rates of Return 6. Portfolio beta and weights Aa Aa Brandon...
Assignment 08 - Risk and Rates of Return 6. Portfolio beta and weights Aa Aa Brandon is an analyst at a wealth management firm. One of his clients holds a $5,000 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Beta Investment Allocation 35% 20% Standard Deviation 23.00% Stock Atteric Inc. (AI) Arthur Trust Inc. (AT) Li Corp. (LC) Baque Co. (BC)...
help pleaae Ch 08: Assignment - Risk and Rates of Return Search this course 6. Portfolio...
help
pleaae
Ch 08: Assignment - Risk and Rates of Return Search this course 6. Portfolio beta and weights Rafael is an analyst at a wealth management firm. One of his dients holds a $10,000 portfolio that consists of four stocks. The investment location in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Standard Deviation Atteric Inc. (AT) Investment Allocation 35% 20% Beta 0.750 1.500 57.00 Arthur Trust Inc(AT) Lobster...
9. Portfolio beta and weights Brandon is an analyst at a wealth management firm. One of...
9. Portfolio beta and weights Brandon is an analyst at a wealth management firm. One of his clients holds a $7,500 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Atteric Inc. (AI) Arthur Trust Inc. (AT) Li Corp. (LC) Transfer Fuels Co. (TF) Investment Allocation 35% 20% 15% 30% Beta 0.750 1.500 1.100 0.500 Standard Deviation 53.00% 57.00% 60.00% 64.00%...
6. Portfolio beta and weights Aa Aa E Rafael is an analyst at a wealth management...
6. Portfolio beta and weights Aa Aa E Rafael is an analyst at a wealth management firm. One of his clients holds a $5,000 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Atteric Inc. (AI) Arthur Trust Inc. (AT) Corp. (LC) Baque Co. (BC) Investment Allocation 35% 20% 15% 30% Beta 0.750 1.400 1.200 0.400 Standard Deviation 38.00% 42.00% 45.00%...
assume the risk free rate is 3.8% and the expected return on the market is 9%....
assume the risk free rate is 3.8% and the expected return on the market is 9%. based on the CAPM, what should be the rate of return for a security having a beta of 1.17? answer in percentage form to two decimals.
+ 34. An analyst collects the following data: Expected market return 15% Risk free rate 8% Expected return on Stock X 17.75% Stock X's beta 1.25 Using these data and CAPM, which of the following statements about stock X is true? Overvalued by 1.75 percentage point Overvalued by 2.25 percentage point Properly valued Undervalued by 1.00 percentage point Undervalued by 3.25 percentage point
11. Assume that the Risk Free rate is 5% and the Expected Return on the market is 10%. Show if these stocks are under, over, or fairly valued. Illustrate it in a chart with the SML and the expected returns of the stocks. CAPM returnasseti RiskFree + [E(Rmarket)- Risk Free] Basset i Security САРМ Over/Under E(Return) Beta Return |Valued? Stock W Stock Y Stock Z 0.035 0.85 1.2 0.095 0.12 1.1 Show (and explain) your results in the following chart....
6. Portfolio beta and weights Aa Aa Brandon is an analyst at a wealth management firm. One of his clients holds a $5,000 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Investment Allocation Beta Standard Deviation 38.00% 35% 0.750 Stock Atteric Inc. (AI) Arthur Trust Inc. (AT) Lobster Supply Corp. (LSC) Baque Co. (BC) 20% 1.600 42.00% 15% 1.200 45.00% 30%...
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....
Assignment 08 - Risk and Rates of Return 6. Portfolio beta and weights Aa Aa Brandon is an analyst at a wealth management firm. One of his clients holds a $5,000 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Beta Investment Allocation 35% 20% Standard Deviation 23.00% Stock Atteric Inc. (AI) Arthur Trust Inc. (AT) Li Corp. (LC) Baque Co. (BC)...
help
pleaae
Ch 08: Assignment - Risk and Rates of Return Search this course 6. Portfolio beta and weights Rafael is an analyst at a wealth management firm. One of his dients holds a $10,000 portfolio that consists of four stocks. The investment location in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Standard Deviation Atteric Inc. (AT) Investment Allocation 35% 20% Beta 0.750 1.500 57.00 Arthur Trust Inc(AT) Lobster...
9. Portfolio beta and weights Brandon is an analyst at a wealth management firm. One of his clients holds a $7,500 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Atteric Inc. (AI) Arthur Trust Inc. (AT) Li Corp. (LC) Transfer Fuels Co. (TF) Investment Allocation 35% 20% 15% 30% Beta 0.750 1.500 1.100 0.500 Standard Deviation 53.00% 57.00% 60.00% 64.00%...
6. Portfolio beta and weights Aa Aa E Rafael is an analyst at a wealth management firm. One of his clients holds a $5,000 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Atteric Inc. (AI) Arthur Trust Inc. (AT) Corp. (LC) Baque Co. (BC) Investment Allocation 35% 20% 15% 30% Beta 0.750 1.400 1.200 0.400 Standard Deviation 38.00% 42.00% 45.00%...
Most questions answered within 3 hours.
-
please don't use the p value method instead use the "5 steps of
hypothesis testing." Or...
asked 10 minutes ago -
It is said that Galileo discovered a basic principle of the
pendulum—that the period is independent...
asked 15 minutes ago -
The Cost of Equity and
Flotation Costs
Messman Manufacturing
will issue common stock to the public...
asked 22 minutes ago -
a) summarize the challenges facing New Britain today
b) identify some of its strengths
c) suggest...
asked 24 minutes ago -
**86 at 40 not 88. please show how got Tr in calculations thank
you
2) The...
asked 25 minutes ago -
McGlaun Company pays its employees every two weeks. The firm
last paid its employees on September...
asked 38 minutes ago -
You have been gifted a Mogwai as a pet and decide to do a little
online...
asked 43 minutes ago -
given the standard of 200 mg/dl and the absorbance of that
standard is 0.640. What is...
asked 46 minutes ago -
Exercise 8-51 Algo
An accounting professor is notorious for being stingy in giving
out good letter...
asked 54 minutes ago -
month
total distribution cost
level of activity (unit produced)
july
230.000
3500
august
250.000
3750
september...
asked 55 minutes ago -
A smoke detector system uses two devices, A and B. If smoke is
present, the probability...
asked 1 hour ago -
Your division head has assigned another important project to you
and your team. This project is...
asked 1 hour ago