Favorable firm-specific news was reported hence stock gave return more than market return
What is the most likely explanation for a +20.0% return on a stock with a beta...
1. A good way to reduce macro risk in a stock portfolio is to invest in stocks that: a. have only specific risks. b. have diversified away the macro risk. c. have low exposure to business cycles. d. pay guaranteed dividends. 2. What is the most likely explanation for a +20.0% return on a stock with a beta of 1.0 in a month when the market returned +10.0%? a. The stock is aggressive. b. The market...
Last month a stock with a beta of 1.0 lost 20% while the S&P 500 had a 10% gain. Given this, it is most likely that the: (Multiple Choice) S&P 500 cannot represent the overall market. firm released some negative information about itself. the market index had an exceptionally good month.
Last month a stock with a beta of 1.0 lost 20% while the S&P 500 had a 10% gain. Given this, it is most likely that the: Multiple Choice stock's beta has been calculated incorrectly. S&P 500 cannot represent the overall market. Incorrect firm released some negative information about itself. the market index had an exceptionally good month.
If Stock A has a higher expected return than Stock B, which of the following statements is most likely? Multiple Choice Stock A has more specific risk. Stock B plots below the security market line. Stock B is a cyclical stock. Stock A has a higher beta.
Beta and required rate of return A stock has a required return of 16%; the risk-free rate is 6.5%; and the market risk premium is 6%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 10%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. If the stock's beta is greater than 1.0, then the change in required rate...
Beta and required rate of return A stock has a required return of 13%; the risk-free rate is 3%; and the market risk premium is 3%. What is the stock's beta? Round your answer to two decimal places. If the market risk premium increased to 10%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. If the stock's beta is equal to 1.0, then the change in required rate...
Problem 8-5 Beta and required rate of return A stock has a required return of 12%; the risk-free rate is 6%; and the market risk premium is 4%. a. What is the stock's beta? Round your answer to two decimal places. b. If the market risk premium increased to 10%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. I. If the stock's beta is less than 1.0, then...
Click here to read the eBook: The Relationship Between Risk and Rates of Return BETA AND REQUIRED RATE OF RETURN A stock has a required return of 11%; the risk-free rate is 5.5%; and the market risk premium is 4%. a. What is the stock's beta? Round your answer to two decimal places. premium b. If the market risk premium increased to 9%, what would happen to the stock's required rate of retum? Assume that the risk-free rate and the...
Stock A has an annual expected return of 8%, a beta of .9, and a firm-specific volatility of 50% Stock B has an annual expected return of 9%, a beta of 1.3, and a firm-specific volatility of 40% The market has a standard deviation of 20%, and the risk-free rate is is 2%. What is the volatility of stock A? (in %, round to 1 decimal place)
Stock A has an annual expected return of 8%, a beta of .9, and a firm-specific volatility of 50% Stock B has an annual expected return of 9%, a beta of 1.3, and a firm-specific volatility of 40% The market has a standard deviation of 20%, and the risk-free rate is is 2%. Suppose we construct a portfolio built out of 50% stock A, 30% stock B, and 20% government t-bills. What is the expected return of this portfolio? (in...