Question

3/191 3/199: P 12-24 (similar to) Question Help - You hear on the news that the S&P 500 was down 1.3% today relative to the risk-free rate (the market's excess return was - 1.3%). You quest are thinking about your portfolio and your investments in Zynga and Proctor and Gamble. a. If Zynga's beta is 1.3, what is your best guess as to Zynga's excess return today? b. If Proctor and Gamble's beta is 0.6, what is your best guess as to P&G's excess return today? a. If Zynga's beta is 1.3, what is your best guess as to Zynga's excess return today? Zynga's excess return today is %. (Round to one decimal place.)

Answer 1

Excess returns on the stock=beta*excess returns on the market

1.
=1.3*(-1.3%)
=-1.690000%

2.
=0.6*(-1.3%)
=-0.780000%