Practice Quiz for Exam 3 - Risk & Return - Pt2B

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The return of stock B is __% The volatility of stock A is __% The volatility of stock B is __%

Accounting Use the following information: Stock A B Good state 12% 17% Bad state 0% -1% Assume there is 60% probability that the good state occurs and 40% chance the bad state occurs. What is the expected return of a portfolio that is 9% invested in stock A and 1-9% invested in B? (Please use 5 decimal places, this should be written in percentage return, so an answer of 23.143% should be written at .23143)

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What is the CAPM required return for Stock Z, in decimal form? Round your answer to 4 decimal places (example: if your answer is .13579,  you should enter .1358).  Margin of error for correct responses: +/- .0005.                 expected return (implied by market price)      Beta     Stock Z 9.7% 1.43     MRP 6% ?     T-bonds 5% ?

If Stock I is correctly priced right now, its Beta must be ______ . Round your answer to 2 decimal places (example: if your answer is 1.2357,  you should enter 1.24).  Margin of error for correct responses: +/- .02.                   expected return (implied by market price)      Beta     Stock I 12.4% ??     S&P500 11%       T-bonds 4%

What is the reward-to-risk ratio for Stock X, in decimal form? Round your answer to 4 decimal places (example: if your answer is .03579,  you should enter .0358).  Margin of error for correct responses: +/- .0005.                   expected return (implied by market price)      Beta     Stock X 9.6% 1.46     S&P500 12% ?     T-bills 4% ?

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State of Economy Return on Stock A Return on Stock B Bear .073-094 Normal .134.142 Bull .062.321 Assume each state of the economy is equally likely to happen. a. Calculate the expected return of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation of each stock. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g 32.16.) c. What is the covariance between the returns of the two stocks? (A negative answer should be indicated by a minus sign, Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) d. What is the correlation between the returns of the two stocks? (A negative answer should be indicated by a minus sign, Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.)

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only  typed answer Stock A's stock has a beta of 1.30, and its required return is 15.25%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.)   Select the correct answer.   a. 11.15%  b. 11.18%  c. 11.21%  d. 11.24%  e. 11.27%

What is the expected standard deviation of stock A's returns based on the information presented in the table? Outcome Probability of outcome Stock A return in outcome Good Medium Bad 19% 48% "2" 40.00% 10.00% -9.00% O 17.02% (plus or minus 4 bps) 20.61% (plus or minus 4 bps) 24.70% (plus or minus 4 bps) 289.81% (plus or minus 4 bps) None of the above is within 4 bps of the correct answer

Astromet is financed entirely by common stock and has a beta of 1.20. The firm pays no taxes. The stock has a price-earnings multiple of 11.0 and is priced to offer a 10.9% expected return. The company decides to repurchase half the common stock and substitute an equal value of debt. Assume that the debt yields a risk-free 4.6%. Calculate the following: Required: a. The beta of the common stock after the refinancing b. The required return and risk premium on the common stock before the refinancing c. The required return and risk premium on the common stock after the refinancing d. The required return on the debt e. The required return on the company (i.e, stock and debt combined) after the refinancing If EBIT remains constant: f. What is the percentage increase in earnings per share after the refinancing? g-1. What is the new price-earnings multiple? g-2. Has anything happened to the stock price? Complete this question by entering your answers in the tabs below. Reg A to E Reg F to G2…

Beta 0.53 Risk-free Rate 0.7% MRP 5.55% Given the data in the table, what is the stock's risk premium? Answer as a percent and use 2 decimal places.

The following three stocks are available in the market: E(R) В 10.4% 1.26 Stock A Stock B 13.6 1.06 Stock C 16.1 1.46 Market 14.0 1 Assume the market model is valid. a. The return on the market is 14.8 percent and there are no unsystematic surprises in the returns. What is the return on each stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Assume a portfolio has weights of 30 percent Stock A, 45 percent Stock B, and 25 percent Stock C. The return on the market is 14.8 percent and there are no unsystematic surprises in the returns. What is the return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Stock A a. Stock B a. Stock C b. Portfolio return -26.75 % % % %

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Tiempo restante U:28:23 What is the beta of a portfolio that has $18,400 in Stock M, $6,320 in Stock N, $32,900 in Stock O and $11,850 in Stock P. Their Betas are .97, 1.04, 1.23, and .88, respectivley? O a. 1.04 O b. 1.11 О с. 1.08 O d. 1.15 O e. .99