Homework Answers
| Stock | CAPM Return | CAPM Return>E(Ri) | Classification |
| XYZ Stock | 12.80% | No | Under valued |
| =4%+(1+10%)*(12%-4%) |
Hence, correct option is "is underpriced"
Add Answer to:
The T-bill rate is 4 percent. The expected return on the market portfolio s conclude that...
Assume the market rate of return is 10.1 percent and the risk-free rate of return is...
Assume the market rate of return is 10.1 percent and the risk-free rate of return is 3.2 percent. Lexant stock has 2 percent less systematic risk than the market and has an actual return of 10.2 percent. This stock: A. is underpriced. B. is correctly priced. C. will plot below the security market line. D. will plot on the security market line. E. will plot to the right of the overall market on a security market line graph.
The risk-free rate of return is 3.7 percent. The risk premium on the market portfolio is...
The risk-free rate of return is 3.7 percent. The risk premium on the market portfolio is 8.8 percent. The table below has information on 5 stocks. Can you figure out which one of them is correctly priced (.e., correctly compensates investors for the amount of systematic risk they are facing)? Stock Beta | #1 #2 Expected Return 9.47% 12.03 14.44 15.80 18.37 0.64 0.97 1.22 1.37 1.68 #3 #4 Multiple Choice O O O Multiple Choice Ο Ο Ο Ο...
The Treasury bill rate is 4%, and the expected return on the market portfolio is 11%....
The Treasury bill rate is 4%, and the expected return on the market portfolio is 11%. According to the capital asset pricing model: a. What is the risk premium on the market? b. What is the required return on an investment with a beta of 1.6? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. If an investment with a beta of 0.8 offers an expected return of 8.6%, does it have...
4. The risk free rate is 3% per annum. The expected return of market portfolio is...
4. The risk free rate is 3% per annum. The expected return of market portfolio is 9% per annum. There is a security with current price being 10 dollars. Its beta is 1.1. It is expected that the security will provide 0.15 dollar dividend in 6 months and the expected ex-dividend price in 6 months is 10.4 dollar. Assume there is no tax. Is the security fairly priced, under priced or over priced? (10 marks)
The Treasury bill rate is 4%, and the expected return on the market portfolio is 11%....
The Treasury bill rate is 4%, and the expected return on the market portfolio is 11%. According to the capital asset pricing model: a. What is the risk premium on the market? b. What is the required return on an investment with a beta of 1.6? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. If an investment with a beta of 0.8 offers an expected return of 8.6%, does it have...
The Treasury bill rate is 4%, and the expected return on the market portfolio is 14%....
The Treasury bill rate is 4%, and the expected return on the market portfolio is 14%. According to the capital asset pricing model: a. What is the risk premium on the market? b. What is the required return on an investment with a beta of 1.4? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. If an investment with a beta of 0.7 offers an expected return of 9.0%, does it have...
A portfolio that combines the risk-free asset and the market portfolio has an expected return of...
A portfolio that combines the risk-free asset and the market portfolio has an expected return of 9 percent and a standard deviation of 16 percent. The risk-free rate is 4.1 percent and the expected return on the market portfolio is 11 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a .38 correlation with the market portfolio and a standard deviation of 60 percent?
Suppose the risk-free rate is 4.3 percent and the market portfolio has an expected return of...
Suppose the risk-free rate is 4.3 percent and the market portfolio has an expected return of 11 percent. The market portfolio has a variance of .0392. Portfolio Z has a correlation coefficient with the market of .29 and a variance of .3295 According to the capital asset pricing model, what is the expected return on Portfolio Z? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16
Expected Portfolio Return Beta 22 0.8 A Market 173 1.0 D) Expected Portfolio Return Beta 30.28 1.8 A Market 198 1.0 If...
Expected Portfolio Return Beta 22 0.8 A Market 173 1.0 D) Expected Portfolio Return Beta 30.28 1.8 A Market 198 1.0 If the simple CAPM is valid and all portfolios are priced correctly, which of the situations below is possible? Consider each situation independently, and assume the risk-free rate is 5% A) Expected Portfolio Return Beta 198 0.8 Market 198 1.0 B) Expected Standard Return Deviation Portfolio 228 88 A Market 17B 168
The risk-free rate is 6% and the expected rate of return on the market portfolio is...
The risk-free rate is 6% and the expected rate of return on the market portfolio is 13%.
a. Calculate the required rate of return on a security with a beta of 1.25. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. If the security is expected to return 16%, is it overpriced or underpriced?
The risk-free rate of return is 3.7 percent. The risk premium on the market portfolio is 8.8 percent. The table below has information on 5 stocks. Can you figure out which one of them is correctly priced (.e., correctly compensates investors for the amount of systematic risk they are facing)? Stock Beta | #1 #2 Expected Return 9.47% 12.03 14.44 15.80 18.37 0.64 0.97 1.22 1.37 1.68 #3 #4 Multiple Choice O O O Multiple Choice Ο Ο Ο Ο...
4. The risk free rate is 3% per annum. The expected return of market portfolio is 9% per annum. There is a security with current price being 10 dollars. Its beta is 1.1. It is expected that the security will provide 0.15 dollar dividend in 6 months and the expected ex-dividend price in 6 months is 10.4 dollar. Assume there is no tax. Is the security fairly priced, under priced or over priced? (10 marks)
A portfolio that combines the risk-free asset and the market portfolio has an expected return of 9 percent and a standard deviation of 16 percent. The risk-free rate is 4.1 percent and the expected return on the market portfolio is 11 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a .38 correlation with the market portfolio and a standard deviation of 60 percent?
Expected Portfolio Return Beta 22 0.8 A Market 173 1.0 D) Expected Portfolio Return Beta 30.28 1.8 A Market 198 1.0 If the simple CAPM is valid and all portfolios are priced correctly, which of the situations below is possible? Consider each situation independently, and assume the risk-free rate is 5% A) Expected Portfolio Return Beta 198 0.8 Market 198 1.0 B) Expected Standard Return Deviation Portfolio 228 88 A Market 17B 168
The risk-free rate is 6% and the expected rate of return on the market portfolio is 13%.
a. Calculate the required rate of return on a security with a beta of 1.25. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. If the security is expected to return 16%, is it overpriced or underpriced?
Most questions answered within 3 hours.
-
4 pts 10. Which of the following hypothesis would be MOST
difficult to test experimentally? Group...
asked 28 seconds from now -
26 of 50
"I have worked at the Arizona Humane Society for ten years, and
have...
asked 17 seconds from now -
A business owner makes 1,000 items a day. Each day he or she
contributes eight hours...
asked 1 minute ago -
A
circular loop in the plane of a paper lies inca0.65 T magnetic
field pointing into...
asked 19 minutes ago -
A business owner is trying to decide whether to buy, rent, or
lease office space and...
asked 19 minutes ago -
Thermal Storage Solar heating of a house is much more efficient
if there is a way...
asked 36 minutes ago -
Considering the “fits” for group and job design dimensions,
suppose you had 12 employees with different...
asked 44 minutes ago -
Consider TCP connection management.
How many segments are typically involved in the TCP connection
establishment? What...
asked 54 minutes ago -
1. You placed a stop-loss order to sell 500 shares of AAPL with
a stop price...
asked 1 hour ago -
Sylva Warehousing desired to locate a central warehouse to serve
five North Carolina markets. Placed on...
asked 1 hour ago -
A regression was run to determine if there is a relationship
between hours of TV watched...
asked 1 hour ago -
The theoretical yield of a reaction is the amount of product
obtained if the limiting reactant...
asked 1 hour ago