Homework Answers
Stock Y would be a better addition to a portfolio than X since it's beta is less.
The return depends on other factors like risk free rate and market rate.
Please do rate me and mention doubts in the comments section.
Stock X has a beta of 0.5 and Stock Y has a beta of 1.20. Which...
Stock X has a beta of 0.5 and Stock Y has a beta of 1.20. Which of the following statements must be true about these securities? (Assume the market is in equilibrium.) a. The required return on Stock Y will be greater than that on Stock X. b. The required return on Stock X and Stock Y will be the same. c. Stock X would be a more desirable addition to a portfolio than Stock Y. d. When held in...
Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the following statements...
Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the following statements must be true, assuming the CAPM is correct. a. Stock A would be a more desirable addition to a portfolio then Stock B. b. In equilibrium, the expected return on Stock B will be greater than that on Stock A. c. When held in isolation, Stock A has more risk than Stock B. d. In equilibrium, the expected return on Stock A will be...
Stock A has a beta of 1.5 and Stock B has a beta of 0.5. Which...
Stock A has a beta of 1.5 and Stock B has a beta of 0.5. Which of the following statements MUST BE TRUE about these securities, for all investors? (Assume the market is in equilibrium.) Group of answer choices Stock A’s return will always be three times higher than Stock B’s return. Stock B would be a more desirable addition to a portfolio than Stock A. Stock A would be a more desirable addition to a portfolio than Stock B....
QUESTION 16 If an investor buys at least 50 stocks from different industries, he or she...
QUESTION 16 If an investor buys at least 50 stocks from different industries, he or she can, through diversification, eliminate all of the company-specific risk inherent in owning stocks, but as a general rule it will not be possible to eliminate all market (systematic) risk. True False 3.5 points QUESTION 17 Stock A's beta is 0.5 and Stock B's beta is 1.5. Which of the following statements must be true about these securities? (Assume market equilibrium.) When held in...
Stock X has an expected return of 15%, standard deviation of 20%, beta of 0.8. Stock...
Stock X has an expected return of 15%, standard deviation of 20%, beta of 0.8. Stock Y has an expected return of 20%, a standard deviation of 40% and a beta of 0.3, and a correlation with stock X of 0.6. Assume the CAPM holds. a. If you are a typical, risk-averse investor with a well-diversified portfolio, which stock would you prefer? b. What are the expected return and standard deviation of a portfolio consisting of 30% of stock X...
EVALUATING RISK AND RETURN Stock X has a 9.5% expected return, a beta coefficient of 0.8,...
EVALUATING RISK AND RETURN Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = CVy = Which stock is riskier for...
EVALUATING RISK AND RETURN Stock X has a 9.5% expected return, a beta coefficient of 0.8,...
EVALUATING RISK AND RETURN Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 40% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = ________ CVy = ________ b. Which...
Althea Corp’s stock beta is 2.13 and its standard deviation is 1.8. Bertha Corp’s stock beta...
Althea Corp’s stock beta is 2.13 and its standard deviation is 1.8. Bertha Corp’s stock beta is 1.67 and its standard deviation is 1.95. Which of the following statements must be true, assuming the CAPM is correct. Althea Corp’s stock has more total risk than Bertha Corp’s stock. Althea Corp’s stock is a more desirable addition to a portfolio than Bertha Corp’s stock. The expected return of Althea Corp’s stock will be greater than that of Bertha Corp’s stock. The...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% standard...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 35% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 30% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx = CVy = Which stock is riskier for a diversified investor? For...
Stock X has a 9.5% expected retum, a beta coefficient of 0.8, and a 30% standard...
Stock X has a 9.5% expected retum, a beta coefficient of 0.8, and a 30% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx = 3.16 CVy = 2 b. Which stock is riskier for...
Stock X has an expected return of 15%, standard deviation of 20%, beta of 0.8. Stock Y has an expected return of 20%, a standard deviation of 40% and a beta of 0.3, and a correlation with stock X of 0.6. Assume the CAPM holds. a. If you are a typical, risk-averse investor with a well-diversified portfolio, which stock would you prefer? b. What are the expected return and standard deviation of a portfolio consisting of 30% of stock X...
Stock X has a 9.5% expected retum, a beta coefficient of 0.8, and a 30% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx = 3.16 CVy = 2 b. Which stock is riskier for...
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