Homework Answers
1.
Holding period return is the return generated from cash flows and
capital gains by selling the asset after the holding period
3.
False..Required return=risk free rate+beta*market risk premium
So, if risk increases two fold, beta increases two fold
new required return=risk free rate+2*old beta*market risk premium=(old required return-risk free rate)*2+risk free rate=2*old required return-risk free rate
So, required return increases by less than two fold
Add Answer to:
#1 and #3
Define holding period return. What is the difference between required return and expected...
#5 and #8 please help de portfolio e portfolio's T useu two-fold the two-fold, then the...
#5 and #8 please help
de portfolio e portfolio's T useu two-fold the two-fold, then the required return should incre urn? Lastly, a porti Describe the ribe the difference between the correlation coefficient between asset's beta coefficient. coefficient between two random variables and an more concise va ortfolio il 63) Support or reject the following statement, "Diversification reduces the total risk & What is the difference between systematic and unsystematic risk? 7 Support or reject the following statement," It is...
Ch 02: Assignment - Risk and Return: Part 1 Term Answer Risk A Expected rate of...
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Term Answer Description Risk A. The potential for variability in the possible outcomes associated with an...
Term Answer Description Risk A. The potential for variability in the possible outcomes associated with an investment. Expected rate of return The portion of an asset's total expected return required by investors as compensation for assuming the additional risks associated with the security, the issuer, and the marketplace. Beta coefficient That portion of an investment's risk calculated as the difference between its total risk and its firm-specific risk. Market risk The mean of the probability distribution of an investment's possible...
Term Description Risk A. The term applied to the risk of an asset that is measured...
Term Description Risk A. The term applied to the risk of an asset that is measured by the standard deviation of the asset's expected returns. That portion of an investment's risk calculated as the difference between its total risk and its firm-specific risk. Expected rate of return B. Beta coefficient L C . This model determines the appropriate required return on a security as the sum of the market's risk-free rate and a risk premium based on the market's risk...
The following table provides the expected return and the standard deviation of returns for srocks and...
The following table provides the expected return and the
standard deviation of returns for srocks and gold. Your client is
currently holding a portfolio of stocks and he is considering
whether he should replace half of the stocks with gold.
.
Question 1 Part a) The following table provides the expected return and the standard deviation of returns for stocks and gold. Your client is currently holding a portfolio of stocks and he is considering whether he should replace haif...
2. 3: Risk and Rates of Return: Risk in Portfolio Context Risk and Rates of Return:...
2. 3: Risk and Rates of Return: Risk in Portfolio Context Risk
and Rates of Return: Risk in Portfolio Context The capital asset
pricing model (CAPM) explains how risk should be considered when
stocks and other assets are held . The CAPM states that any stock's
required rate of return is the risk-free rate of return plus a risk
premium that reflects only the risk remaining diversification. Most
individuals hold stocks in portfolios. The risk of a stock held in...
Term Answer Description Risk A. The risk of an asset when it is the only asset...
Term Answer Description Risk A. The risk of an asset when it is the only asset in an investor's portfolio. Expected rate of return That portion of an investment's risk calculated as the difference between its total risk and its firm-specific risk. Beta coefficient This model determines the appropriate required return on a security as the sum of the market's risk-free rate and a risk premium based on the market's risk premium and the security's beta coefficient. Market risk The...
(CAPM and expected returns) a Given the following holding period retums, mh compute the average rums...
(CAPM and expected returns) a Given the following holding period retums, mh compute the average rums and the standad deviations for the Zemin Coporation and for the market b. If Zemin's beta is 1.32 and the risk-free rate is 7 percent, what would be an expected returs for an investor owning Zemin? (Note Because the precedng retus are based on montly daa, you wil reod to avuaire the retums to make them comparable with the risk-fhee rate. For smplicity, ycan...
Click here to read the eBook: Stand-Alone Risk EXPECTED AND REQUIRED RATES OF RETURN Assume that...
Click here to read the eBook: Stand-Alone Risk EXPECTED AND REQUIRED RATES OF RETURN Assume that the risk-free rate is 4% and the market risk premium is 7%. a. What is the required return for the overall stock market? Round your answer to two decimal places. % b. What is the required rate of return on a stock with a beta of 1.67 Round your answer to two decimal places. % Click here to read the eBook: Risk in a...
#5 and #8 please help
de portfolio e portfolio's T useu two-fold the two-fold, then the required return should incre urn? Lastly, a porti Describe the ribe the difference between the correlation coefficient between asset's beta coefficient. coefficient between two random variables and an more concise va ortfolio il 63) Support or reject the following statement, "Diversification reduces the total risk & What is the difference between systematic and unsystematic risk? 7 Support or reject the following statement," It is...
Ch 02: Assignment - Risk and Return: Part 1 Term Answer Risk A Expected rate of return B Description The rate of return expected to be realized from an investment, calculated as the mean of the probability distribution of its possible returns. The term applied to the risk of an asset that is measured by the standard deviation of the asset's expected returns. The possibility that an actual outcome will be better or worse than its expected outcome The general...
Term Answer Description Risk A. The potential for variability in the possible outcomes associated with an investment. Expected rate of return The portion of an asset's total expected return required by investors as compensation for assuming the additional risks associated with the security, the issuer, and the marketplace. Beta coefficient That portion of an investment's risk calculated as the difference between its total risk and its firm-specific risk. Market risk The mean of the probability distribution of an investment's possible...
Term Description Risk A. The term applied to the risk of an asset that is measured by the standard deviation of the asset's expected returns. That portion of an investment's risk calculated as the difference between its total risk and its firm-specific risk. Expected rate of return B. Beta coefficient L C . This model determines the appropriate required return on a security as the sum of the market's risk-free rate and a risk premium based on the market's risk...
The following table provides the expected return and the
standard deviation of returns for srocks and gold. Your client is
currently holding a portfolio of stocks and he is considering
whether he should replace half of the stocks with gold.
.
Question 1 Part a) The following table provides the expected return and the standard deviation of returns for stocks and gold. Your client is currently holding a portfolio of stocks and he is considering whether he should replace haif...
2. 3: Risk and Rates of Return: Risk in Portfolio Context Risk
and Rates of Return: Risk in Portfolio Context The capital asset
pricing model (CAPM) explains how risk should be considered when
stocks and other assets are held . The CAPM states that any stock's
required rate of return is the risk-free rate of return plus a risk
premium that reflects only the risk remaining diversification. Most
individuals hold stocks in portfolios. The risk of a stock held in...
Term Answer Description Risk A. The risk of an asset when it is the only asset in an investor's portfolio. Expected rate of return That portion of an investment's risk calculated as the difference between its total risk and its firm-specific risk. Beta coefficient This model determines the appropriate required return on a security as the sum of the market's risk-free rate and a risk premium based on the market's risk premium and the security's beta coefficient. Market risk The...
(CAPM and expected returns) a Given the following holding period retums, mh compute the average rums and the standad deviations for the Zemin Coporation and for the market b. If Zemin's beta is 1.32 and the risk-free rate is 7 percent, what would be an expected returs for an investor owning Zemin? (Note Because the precedng retus are based on montly daa, you wil reod to avuaire the retums to make them comparable with the risk-fhee rate. For smplicity, ycan...
Click here to read the eBook: Stand-Alone Risk EXPECTED AND REQUIRED RATES OF RETURN Assume that the risk-free rate is 4% and the market risk premium is 7%. a. What is the required return for the overall stock market? Round your answer to two decimal places. % b. What is the required rate of return on a stock with a beta of 1.67 Round your answer to two decimal places. % Click here to read the eBook: Risk in a...
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