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The market price of a security is $50. Its expected rate of return is 14%. The risk- free rate is 6% and the market ris...
The market price of a security is $50. Its expected rate of return is 14%. The...
The market price of a security is $50. Its expected rate of return is 14%. The risk- free rate is 6% and the market risk premium is 8.5%. What will be the market price of the security if its correlation coefficient with the market portfolio doubles and all other variables remain unchanged)? Assume that the stock is expected to pay a con- stant dividend in perpetuity.
The market price of a security is $26. Its expected rate of return is 13%. The...
The market price of a security is $26. Its expected rate of return is 13%. The risk-free rate is 5% and the market risk premium is 7.0%. What will be the market price of the security if its correlation coefficient with the market portfolio doubles (and all other variables remain unchanged)? Assume that the stock is expected to pay a constant dividend in perpetuity. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
5. Assume CAPM holds: The market price of a security is $50. Its expected rate of...
5. Assume CAPM holds: The market price of a security is $50. Its expected rate of return is 14%. The risk-free rate is 6% and the market risk premium is 8.5%. a. What is the expected price next year? b. What will be the expected price of the security next year if its correlation coefficient with the market portfolio doubles (and all other variables remain unchanged)?
The market price of a security is $64. Its expected rate of return is 13%. The...
The market price of a security is $64. Its expected rate of return is 13%. The risk-free rate is 6%, and the market risk premium is 9%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity.
E A B The market price of a security is $40. Its expected rate of return...
E A B The market price of a security is $40. Its expected rate of return is 13%. The risk-free rate is 7%, and the market risk premium is 8% . What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity. Market price of security Security expected rate of return Risk free rate of return Market risk premium Change...
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...
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...
Security ABC has a price of $35 and a beta of 1.5. The risk-free rate is...
Security ABC has a price of $35 and a beta of 1.5. The risk-free rate is 5% and the market risk premium is 6%. a)Explain the terms beta and market risk premium. b)What is the market portfolio? c)According to the CAPM, what return do investors expect on the security? d)Investors expect the security not to pay any dividend next year. e)At what price do investors expect the security to trade next year? f)At what price do investors expect the security...
Ch 02: Assignment - Risk and Return: Part 1 Term Answer Risk A Expected rate of...
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...
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 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 market price of a security is $50. Its expected rate of return is 14%. The risk- free rate is 6% and the market risk premium is 8.5%. What will be the market price of the security if its correlation coefficient with the market portfolio doubles and all other variables remain unchanged)? Assume that the stock is expected to pay a con- stant dividend in perpetuity.
5. Assume CAPM holds: The market price of a security is $50. Its expected rate of return is 14%. The risk-free rate is 6% and the market risk premium is 8.5%. a. What is the expected price next year? b. What will be the expected price of the security next year if its correlation coefficient with the market portfolio doubles (and all other variables remain unchanged)?
E A B The market price of a security is $40. Its expected rate of return is 13%. The risk-free rate is 7%, and the market risk premium is 8% . What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity. Market price of security Security expected rate of return Risk free rate of return Market risk premium Change...
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...
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...
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 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?
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