Homework Answers
Ans have the same intercept with a steeper slope; fall
If all investors become less risk averse, the SML will have the same intercept with a steeper slope and security's risk premium will fall. SML line is a line drawn on chart that shows graphical representation of CAPM.
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If all investors become less risk averse, the security market line will Multiple Choice ecurity's risk...
True or false and why? 5. If all investors in the market become less risk-averse, the...
True or false and why? 5. If all investors in the market become less risk-averse, the slope of the Security Market alone (SML) will decrease. 6. If an investor purchase a enough stocks (say, S&P500 index), the investor can eliminate all of the market risk embedded in those stocks.
The following graph plots the current security market line (SML) and indicates the return that investors...
The following graph plots the current security market line (SML)
and indicates the return that investors require from holding stock
from Happy Corp. (HC). Based on the graph, complete the table that
follows:
Return on HC's Stock - Coordinates (1.2, 10.4)
Blue line - Slope is 4.5, Y-Intercept is 5.
CAPM Elements
Value
Risk-free rate (rRFrRF)
(10.4% / 2.8% / 5% / 5.5%)
Market risk premium (RPMRPM)
(4.5% / 5.9% / 8.1% / 3.4%)
Happy Corp. stock’s beta
(1.9 /...
The following graph plots the current security market line (SML) and indicates the return that investors...
The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) 20.0 16.0 12.0 Return on HC's Stock 8.0 4.0 0.0 0.5 1.0 1.5 2.0 RISK (Betal CAPM Elements Value Risk-free rate (FRF) 4.0% Market risk premium (RPM) 4.4% Happy Corp. stock's beta 2.2% Required rate of return on 7.6% Happy Corp. stock...
8. Changes to the security market line The following graph plots the current security market line...
8. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) 20.0 16.0 12.0 Return on HC's Stock 1 8.0 4.0 0.0 0.5 1.0 1.5 2.0 RISK (Beta) Value CAPM Elements Risk-free rate (PRF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return...
8. Changes to the security market line The following graph plots the current security market line...
8. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) 20.0 16.0 12.0 Return on HC's Stock 1 8.0 4.0 0.0 0.5 1.0 1.5 2.0 RISK (Beta) Value CAPM Elements Risk-free rate (PRF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return...
4. Changes to the security market line The following graph plots the current security market line (SML) and indi...
4. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percenti 20.0 16.0 Return on HC's Stock 12.0 8.0 4.0 0.0 0.5 10 1.5 2.0 RISK (Betal CAPM Elements Value Risk-free rate (rar) Market risk premium (RPe) Happy Corp. stock's beta Required rate of return on...
If all investors become less risk averse, what will happen to the SML?
If all investors become less risk averse, what will happen to the SML?
Assignment 08 - Risk and Rates of Return 8. Changes to the security market line The...
Assignment 08 - Risk and Rates of Return 8. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from Molding stock from Happy Corp. (HC). Based on the graph, complete the table that follows REQUIRED RATE OF RETURN Percent Returns RISK (Betal CAPM Elements Value Risk-free rate( ) Market risk premium (RPM) Happy Corp. stock's beta Required rate of retum on Happy Corp. stock An analyst...
8. Changes to the security market line Aa Aa E The following graph plots the current...
8. Changes to the security market line Aa Aa E The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) Return on HC's Stock 0.0 0.5 1.0 1.5 2.0 RISK (Beta) Value CAPM Elements Risk-free rate (TRF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp....
Ch 08: Assignment - Risk and Rates of Return 11. Changes to the security market line...
Ch 08: Assignment - Risk and Rates of Return 11. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows: REQUIRED RATE OF RETURN (Percent) Return on HC's Stock RISK (Beta) Ch 08: Assignment - Risk and Rates of Return RISK (Beta) Value 4.05 CAPM Elements Risk-free rate (TRF) Market risk...
The following graph plots the current security market line (SML)
and indicates the return that investors require from holding stock
from Happy Corp. (HC). Based on the graph, complete the table that
follows:
Return on HC's Stock - Coordinates (1.2, 10.4)
Blue line - Slope is 4.5, Y-Intercept is 5.
CAPM Elements
Value
Risk-free rate (rRFrRF)
(10.4% / 2.8% / 5% / 5.5%)
Market risk premium (RPMRPM)
(4.5% / 5.9% / 8.1% / 3.4%)
Happy Corp. stock’s beta
(1.9 /...
The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) 20.0 16.0 12.0 Return on HC's Stock 8.0 4.0 0.0 0.5 1.0 1.5 2.0 RISK (Betal CAPM Elements Value Risk-free rate (FRF) 4.0% Market risk premium (RPM) 4.4% Happy Corp. stock's beta 2.2% Required rate of return on 7.6% Happy Corp. stock...
8. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) 20.0 16.0 12.0 Return on HC's Stock 1 8.0 4.0 0.0 0.5 1.0 1.5 2.0 RISK (Beta) Value CAPM Elements Risk-free rate (PRF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return...
8. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) 20.0 16.0 12.0 Return on HC's Stock 1 8.0 4.0 0.0 0.5 1.0 1.5 2.0 RISK (Beta) Value CAPM Elements Risk-free rate (PRF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return...
4. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percenti 20.0 16.0 Return on HC's Stock 12.0 8.0 4.0 0.0 0.5 10 1.5 2.0 RISK (Betal CAPM Elements Value Risk-free rate (rar) Market risk premium (RPe) Happy Corp. stock's beta Required rate of return on...
Assignment 08 - Risk and Rates of Return 8. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from Molding stock from Happy Corp. (HC). Based on the graph, complete the table that follows REQUIRED RATE OF RETURN Percent Returns RISK (Betal CAPM Elements Value Risk-free rate( ) Market risk premium (RPM) Happy Corp. stock's beta Required rate of retum on Happy Corp. stock An analyst...
8. Changes to the security market line Aa Aa E The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows. REQUIRED RATE OF RETURN (Percent) Return on HC's Stock 0.0 0.5 1.0 1.5 2.0 RISK (Beta) Value CAPM Elements Risk-free rate (TRF) Market risk premium (RPM) Happy Corp. stock's beta Required rate of return on Happy Corp....
Ch 08: Assignment - Risk and Rates of Return 11. Changes to the security market line The following graph plots the current security market line (SML) and indicates the return that investors require from holding stock from Happy Corp. (HC). Based on the graph, complete the table that follows: REQUIRED RATE OF RETURN (Percent) Return on HC's Stock RISK (Beta) Ch 08: Assignment - Risk and Rates of Return RISK (Beta) Value 4.05 CAPM Elements Risk-free rate (TRF) Market risk...
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