Question

P8-8 (similar to) Question Help O (Related to Checkpoint 8.3) (Systematic risk and expected rates of retum) The following table, contains beta coefficient estimates for six firme. Calculate the expected increase in the value of each firm's shares if the market portfolio wore to increase by 10 percent. Perform the same calculation where the market drops by 10 percent. Which set of firms has the most variable or volatile stock retums? Input the expected increase in the value of each firm's shares if the market portfolio were to increase by 10%. (Round each answer to two decimal places.) Company Expected Increase Yahoo Finance (Yahoo.com) Beta Estimate Computers and Software 2.39 i Data Table Apple Inc. (AAPL) Dell Inc. (DELL) Hewlett Packard (HPQ) 1.39 1.36 Yahoo Finance (Yahoo.com) Utilities American Electric Power Co. (AEP) Duke Energy Corp. (DUK) Centerpoint Energy (CNP) 0.66 0.59 0.85 Company Computers and Software Apple Inc. (AAPL) Dell Inc. (DELL) Hewlett Packard (HPQ) Utilities American Electric Power Co. (AEP) Duke Energy Corp. (DUK) Centerpoint Energy (CNP) 2.39 1.39 1.36 % 0.65 0.59 0.85 Print Done Enter your answer in the edit fields and then click Check Answer

Answer 1

MARKET INCREASES:
1.
=2.39*10%=23.90%

2.
=1.39*10%=13.90%

3.
=1.36*10%=13.60%

4.
=0.66*10%=6.60%

5.
=0.59*10%=5.90%

6.
=0.85*10%=8.50%

MARKET DROPS:

1.
=-2.39*10%=-23.90%

2.
=-1.39*10%=-13.90%

3.
=-1.36*10%=-13.60%

4.
=-0.66*10%=-6.60%

5.
=-0.59*10%=-5.90%

6.
=-0.85*10%=-8.50%

Most variable:
Computers and Software, Apple