The expected impact of unanticipated macroeconomic events on a security's return during the period is
Multiple Choice
proportional to the firm's beta.
equal to the risk-free rate.
included in the security's expected return.
infinite.
Incorrectzero.
Ans Zero
Because it must average to zero, otherwise it would be incorporated in the expected return.
All other options are incorrect.
The expected impact of unanticipated macroeconomic events on a security's return during the period is Multiple...
Ch 02: Assignment - Risk and Return: Part 1 Term Answer Risk A Expected rate of return B Description The rate of return expected to be realized from an investment, calculated as the mean of the probability distribution of its possible returns. The term applied to the risk of an asset that is measured by the standard deviation of the asset's expected returns. The possibility that an actual outcome will be better or worse than its expected outcome The general...
According to the CAPM, what is the expected market return given an expected return on a security of 17.0%, a stock beta of 1.5, and a risk-free interest rate of 5%? Multiple Choice 11.3% 18.0% 7.5% 13%
A stock with a beta of zero would be expected to have a rate of return equal to: -the risk-free rate. -the market rate. -the prime rate. -the market rate less the risk-free rate. -zero.
Which of the following statements is/are INCORRECT? I. Beta measures a security's market risk, also known as systematic risk. II. SML is a graphical depiction of WACC model. III. If investors become more risk averse, the slope of SML will increase accordingly. IV. Other things being equal, a security's required rate of return doubles when its beta value doubles. V. Diversification will normally reduce the riskiness of a portfolio of securities. VI. Federal Reserve cuts an interest rate is considered...
Expected return is the return on a _______ asset expected in the future. Multiple Choice A. risky B. average C. portfolio D. no-risk E. risk-free
Consider the CAPM. The risk-free rate is 5%, and the expected return on the market is 14%. What is the expected return on a stock with a beta of 1.2? Multiple Choice 22% 17.8% 12.5% 15.8%
1) ased on the following information, what is the expected return? State of Probability of State Rate of Return if Economy of Economy State Occurs Recession .33 − 10.10% Normal .36 11.60% Boom .31 21.40% Multiple Choice a) 7.63% b) 10.81% c) 7.48% d) 7.56% e) 14.14% f) f6.85% 2) A stock has a beta of 1.17 and an expected return of 11.21 percent. If the risk-free rate is 3.2 percent, what is the stock's reward-to-risk ratio? Multiple Choice 5.99%...
Explain your answer in depth - show formulas and all relevant stuff The current market price of a security is $50, the security's expected return is 15%, the riskless rate of interest is 2%, and the market risk premium is 8% What is the beta of the security? What is the covariance of returns on this portfolio? What will be the security's price, if the covariance of its rate of return with the market portfolio doubles? How is your result...
The stock of Big Joe's has a beta of 1.50 and an expected return of 12.60 percent. The risk-free rate of return is 5.1 percent. What is the expected return on the market? Multiple Choice 4.95% 8.60 % 10.10% 15.15% 7.50%
Consider the CAPM. The risk-free rate is 6%, and the expected return on the market is 18%. What is the expected return on a stock with a beta of 1.3? Multiple Choice o 6% o 15.6% o 18% o 21.6%