Homework Answers
Expected return = risk free rate + beta * market risk premium
=>
Expected return = risk free rate + beta * (market return - risk free rate)
=>
Expected return = risk free rate + 1 * (market return - risk free rate)
=>
Expected return = market return
= 7.5%
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Problem 7.26 Anthony knows that the beta of his portfolio is equal to 1, but he...
Kevin knows that the beta of his portfolio is equal to 1, but he does not...
Kevin knows that the beta of his portfolio is equal to 1, but he does not know the risk-free rate of return or the market risk premium. He also knows that the expected return on the market is 8.25 percent. What is the expected return on Kevin’s portfolio? (Round answer to 2 decimal places, e.g. 12.25) expected return: %
Problem 6.12 If the expected return on the market is 7 percent and the risk-free rate...
Problem 6.12 If the expected return on the market is 7 percent and the risk-free rate is 4 percent, What is the expected return for a stock with a beta equal to 1.10? (Round answer to 2 decimal places, e.g. 0.15.) Expected return LINK TO TEXT What is the market risk premium? (Round answer to 2 decimal places, e.g. 0.15.) Market risk premium Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT...
Your answer is incorrect. Try again. You have just invested in a portfolio of three stocks....
Your answer is incorrect. Try again. You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below. Stock А Beta 1.52 Investment $196,000 294,000 490,000 0.55 1.34 Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 18 percent and...
Sample Test Problem 7.03 You have just invested in a portfolio of three stocks. The amount...
Sample Test Problem 7.03 You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below Stock Investment Beta $188,000 1.51 А 282,000 0.52 В 470,000 1.35 с Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 18 percent and...
Problem 7.27 (Solution Video) In February 2017 the risk-free rate was 2.97 percent, the market risk...
Problem 7.27 (Solution Video) In February 2017 the risk-free rate was 2.97 percent, the market risk premium was 6 percent, and the beta for Twitter stock was 0.99. What is the expected return that was consistent with the systematic risk associated with the returns on Twitter stock? (Round answer to 2 decimal places, e.g. 17.54%.) Expected return % Click if you would like to Show Work for this question: Open Show Work
Please explain and show work: What is Nico’s portfolio beta if he invests an equal amount...
Please explain and show work: What is Nico’s portfolio beta if he invests an equal amount in asset X with a beta of 0.50, asset Y with a beta of 1.50, the risk-free asset , and the market portfolio? Can this be solved using a TI 83+?
Portfolio beta and weights Antonio is an analyst at a wealth management firm. One of his...
Portfolio beta and weights Antonio is an analyst at a wealth management firm. One of his clients holds a $7,500 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Investment Allocation Beta Standard Deviation Atteric Inc. (AI) 35% 0.900 0.38% Arthur Trust Inc. (AT) 20% 1.600 0.42% Lobster Supply Corp. (LSC) 15% 1.300 0.45% Baque Co. (BC) 30% 0.500 0.49% Antonio...
PORTFOLIO BETA A mutual fund manager has a $20 million portfolio with a beta of 2.00....
PORTFOLIO BETA A mutual fund manager has a $20 million portfolio with a beta of 2.00. The risk-free rate is 7.50%, and the market risk premium is 6.5%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 19%. What should be the average beta of the new stocks added to the portfolio? Do not round intermediate calculations....
Question 10 In February 2017 the risk-free rate was 4.97 percent, the market risk premium was...
Question 10 In February 2017 the risk-free rate was 4.97 percent, the market risk premium was 6 percent, and the beta for Twitter stock was 1.47. What is the expected return that was consistent with the systematic risk associated with the returns on Twitter stock? (Round answer to 2 decimal places, e.g. 17.54%.) Expected return Click if you would like to Show Work for this question: Open Show Work Question Attempts: 0 of 2 used SAVE FOR LATER SUBMIT ANSWER
Problem 2 (15 points): FIN300 Inc's stock has an expected return of 12.25%, a beta of...
Problem 2 (15 points): FIN300 Inc's stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate (R*) is 5.00%, what is the market risk premium? Hint: I am asking for Market Risk Premium term not Market Expected Return term. While Market Expected Return is denoted by Rm, Market Risk Premium is denoted as (Rm-R))
Problem 6.12 If the expected return on the market is 7 percent and the risk-free rate is 4 percent, What is the expected return for a stock with a beta equal to 1.10? (Round answer to 2 decimal places, e.g. 0.15.) Expected return LINK TO TEXT What is the market risk premium? (Round answer to 2 decimal places, e.g. 0.15.) Market risk premium Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT...
Your answer is incorrect. Try again. You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below. Stock А Beta 1.52 Investment $196,000 294,000 490,000 0.55 1.34 Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 18 percent and...
Sample Test Problem 7.03 You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below Stock Investment Beta $188,000 1.51 А 282,000 0.52 В 470,000 1.35 с Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 18 percent and...
Problem 7.27 (Solution Video) In February 2017 the risk-free rate was 2.97 percent, the market risk premium was 6 percent, and the beta for Twitter stock was 0.99. What is the expected return that was consistent with the systematic risk associated with the returns on Twitter stock? (Round answer to 2 decimal places, e.g. 17.54%.) Expected return % Click if you would like to Show Work for this question: Open Show Work
Question 10 In February 2017 the risk-free rate was 4.97 percent, the market risk premium was 6 percent, and the beta for Twitter stock was 1.47. What is the expected return that was consistent with the systematic risk associated with the returns on Twitter stock? (Round answer to 2 decimal places, e.g. 17.54%.) Expected return Click if you would like to Show Work for this question: Open Show Work Question Attempts: 0 of 2 used SAVE FOR LATER SUBMIT ANSWER
Problem 2 (15 points): FIN300 Inc's stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate (R*) is 5.00%, what is the market risk premium? Hint: I am asking for Market Risk Premium term not Market Expected Return term. While Market Expected Return is denoted by Rm, Market Risk Premium is denoted as (Rm-R))
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