Explain the interpretation of a beta value of 1.5 when the overall market valuations are rising....
Explain the interpretation of a beta value of 1.5 when the overall market valuations are rising. Explain with examples.
Homework Answers
Beta value of 1.5 indicates that fr every 1 unit rise in market value, the stock rises by 1.5 units. Hence the stock is much more riskier than market. As the market valuations are rising, it is a positive sign for the stock. However, there is a downside risk if the market valuations are falling as the stock will tend to fall 1.5 times more than the market.
For example, if a stock in communication sector listed in S&P 500 has a beta of 1.5, if S&P 500 is rising by 1 unit the stock rises by 1.5 units.
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Explain the interpretation of a beta value of 1.5 when the
overall market valuations are rising....
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Stock D has a beta coefficient of 1.5 making it slightly more variable than the overall...
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1. If a stock had a beta of 1.5 we would say that a. it is...
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Thompson Home Remodeling has a 1.40 beta. If the overall stock market increases by 4 percent,...
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The standard deviation of the market-index portfolio is 20%. Stock A has a beta of 1.5 and a residual standard deviation of 30% a. Calculate the total variance for an increase of 0.15 in its beta. (Do not round intermediate calculations.) Total variance b. Calculate the total variance for an increase of 3% percentage points) in its residual standard deviation (Do not round intermediate calculations.) Total variance
Ford Motor Company has a beta of 1.55. If the overall stock market increases by 6 percent, based on this information, how much should investors assume that Ford will increase? (Enter your answer as a percent rounded to 2 decimal places.) Volatility for Ford Motor company stock
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