You have analyzed four stocks and obtained the following results: Expected Standard Stock return deviation Beta...
You have analyzed four stocks and obtained the following results: Expected Standard Stock return deviation Beta J 9% 16% 0.3 A 10% 17% 0.8 C 8% 15% 0.6 K 11% 16% 0.5 A risk-averse investor, who will be invested in only a single stock, would choose to invest in Stock
Stock J
Stock C
Stock A
Stock K
Homework Answers
A risk averse investor will invest in the stock with the lowest risk.
Beta is a measure of stand alone risk while standard deviation is a measure of total risk.
Hence, the investor will invest in the stock with least beta
i.e. Stock J
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You have analyzed four stocks and obtained the following
results: Expected Standard Stock return deviation Beta...
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...
3. Stocks A, B, C and D have the same standard deviation of 10% and the...
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4. Stock A has the expected return of 12%, the standard deviation of 15%, and the...
4. Stock A has the expected return of 12%, the standard deviation of 15%, and the CAPM beta of 0.5. Stock B has the expected return of 18%, the standard deviation of 20% and the CAPM beta of 1.1. The risk-free rate is 3%. If you have no other wealth could invest in some combination of the risk-free asset and only one of these two stocks, which of the stocks A and B will you choose and why? (1 point)
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You have the following data on three stocks: Stock Standard Deviation Beta A 20% 1.00 B...
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Given the following information for the two stocks: Stock Expected Return Standard Deviation Investment Beta 16%...
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alk-Through Stock X has a 9.5 % expected return, 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. CV 3.16 CVy 2 b. Which stock...
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