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3. The following information is given with respect to stock A: Scenario Probability Market return 1 0.1 -0.18 2 0.3 0.07 3 0.4 0.16 4 0.2 0.21 Knowing that the Rfis 0.07 compute alpha and the information ratio. Portfolio P return -0.32 0.00 0.22 0.40

he table below shows the betas and portfolio weights for 3 stocks:   The table below shows the betas and portfolio weights for 3 stocks:     Portfolio weights Stock Beta Portfolio 1 Portfolio 2 A 1.8 0.3 0.1 B 1.1 0.5 0.4 C 0.5 0.2 0.5   Calculate the beta of each portfolio. What is the beta of portfolio 1? What is the beta of portfolio 2?   If you are more concerned about risk than return, which portfolio should you pick? Portfolio 2 Portfolio

Suppose we have the following information:   Securit Amount Invested Expected Return Beta Stock   A RM1 ,OOO 8% 0.80   Stock B RM2,OOO 12% 0.95   Stock C RM3,OOO 15% 1.10   Stock D RM4,OOO 18%   a) Compute the expected return on this portfolio.    b) Calculate the beta of the portfolio.    c) Does this portfolio have more or less systematic risk than an average asset? Explain.

Suppose the beta estimated from the CAPM for stock A is 2.3 and stock B  is 1.1.   What is the beta of an equally weighted stock portoflio of A and B stock?

A portfolio has three stocks. Their portfolio weights and expected returns are as follows.       Weight E(r) Stock A 0.4 22% Stock B 0.4 4% Stock C 0.2 -18% What is the expected return on the portfolio?

Consider information given in the table below and answers the question asked thereafter: State Probability  return on stock A Return on stock B A 0.15 10% 9% B 0.15 6% 15% C 0.10 20% 10% D 0.18 5% -8% E 0.12 -10% 20% F 0.30 8% 5% i. Calculate expected return on each stock? On the basis of this measure, which stockyou will choose?ii. Calculate standard deviation of the returns on each stock? On the basis of thismeasure, which stock you will choose?iii. Calculate coefficient of variance of the returns on each stock? On the basis of thismeasure, which stock you will choose?

Assume that you formed a portfolio of three stocks, X, Y, and Z. The stock X's beta is 1.5, stock Y's beta is 2, and stock Z's beta is 0.5. If the weight of your wealth invested in stock X is 0.4, the weight invested in stock Y is 0.2, find the portfolio's beta.

Consider an investment portfolio that consists of three different stocks, with the amount invested in each asset shownbelow. Assume the risk-free rate is 2.5% and the market risk premium is 6%. Use this information to answer thefollowing questions.Stock Weights BetasChesapeake Energy 25% 0.8Sodastream 50% 1.3Pentair 25% 1.0a) Compute the expected return for each stock using the CAPM and assuming that the stocks are all fairly priced.b) Compute the portfolio beta and the expected return on the portfolio.c) Now assume that the portfolio only includes 50% invested in Pentair and 50% invested in Sodastream (i.e., a twoassetportfolio). The yearly-return standard deviation of Pentair is 48% and the yearly-return standard deviation ofSodastream is 60%. The correlation coefficent between Pentair’s returns and Sodastream’s returns is 0.3 What is theexpected yearly-return standard deviation for this portfolio?

Expected return of a portfolio using beta. The beta of four stocks—​G, ​H, I, and J—are 0.44​, 0.75​, 1.21​, and 1.55​, respectively and the beta of portfolio 1 is 0.99​, the beta of portfolio 2 is 0.83​, and the beta of portfolio 3 is 1.14. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 3.5​% ​(risk-free rate) and a market premium of 10.0​% ​(slope of the​ line) What is the expected return of portfolio​ 1?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 2?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 3?     ​(Round to two decimal​ places.)

Expected return of a portfolio using beta. The beta of four stocks—​G, ​H, I, and J—are 0.44​, 0.75​, 1.21​, and 1.55​, respectively and the beta of portfolio 1 is 0.99​, the beta of portfolio 2 is 0.83​, and the beta of portfolio 3 is 1.14. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 3.5​% ​(risk-free rate) and a market premium of 10.0​% ​(slope of the​ line)? What is the expected return of stock​ G?     ​(Round to two decimal​ places.) What is the expected return of stock​ H?     ​(Round to two decimal​ places.) What is the expected return of stock​ I?     ​(Round to two decimal​ places.) What is the expected return of stock​ J?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 1?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 2?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 3?…

Expected return of a portfolio using beta. The beta of four stocks—​P, ​Q, R, and S—are 0.49​, 0.81​, 1.19​, and 1.53​, respectively and the beta of portfolio 1 is 1.01​, the beta of portfolio 2 is 0.86​, and the beta of portfolio 3 is 1.15. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 4.5​% ​(risk-free rate) and a market premium of 12.0​% ​(slope of the​ line)? What is the expected return of stock​ P?     ​(Round to two decimal​ places.) What is the expected return of stock​ Q?     ​(Round to two decimal​ places.) What is the expected return of stock​ R?     ​(Round to two decimal​ places.) What is the expected return of stock​ S?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 1?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 2?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 3?…

Suppose you have the following expectations about the market condition and the returns on Stocks X and Y.   a)  What are the expected returns for Stocks X and Y, E(rX) and E(rY)? b)  What are the standard deviations of the returns for Stocks X and Y, σX and σY?

If a portfolio of the two assets has a beta of .99, what are the portfolio weights? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)      Weight of stock   Risk-free weight

A stock portfolio has the following returns under the market conditions listed below. Market Condition Probability Return Bull 0.4 $ 200 Stable 0.3 $100 Bear 0.3 - $100 Referring to Scenario 20-4, what is the EMV?

i)  Calculate the expected return for each stock assuming the Capital Asset Pricing Model (CAPM) is valid, and explain if they are correctly priced. Show your calculations.

From the following information, calculate covariance between stocks A and B and expected return and risk of a portfolio in which A and B are equally weighted.Which stock would be recommend if investment in individual stock is to be made? Justify  answer using numerical calculations.   Stock A Stock B Expected return 24% 35% Standard deviation 12% 18% Coefficient of correlation 0.65        0.65

What should be the beta of a replacement stock if an investor wishes to achieve a portfolio beta of 1.0 by replacing stock B in the following equally weighted portfolio: stock A = .79 beta; stock B = 1.0 beta; stock C = 1.13 beta?   A. .93 beta   B. 1.08 beta   C. 1.00 beta   D. 1.10 beta

You are given the following information about a portfolio consisting of stocks X, Y, and Z: Stock Investment Expected Return X 10,000 8% Y 15,000 12% 25,000 16% Calculate the expected return of the portfolio.

Expected return of a portfolio using beta. The beta of four stocks-P, Q, R, and S-are 0.59, 0.89, 1.05, and 1.31, respectively and the beta of portfolio 1 is 0.96, the beta of portfolio 2 is 0.87, and the beta of portfolio 3 is 1.05. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 4.5% (risk-free rate) and a market premium of 12.0% (slope of the line)? ..... What is the expected return of stock P? % (Round to two decimal places.)

If you hold a portfolio made up of the following stocks:     Investment Value Beta Stock X $4,000 1.5 Stock Y $5,000 1.0 Stock Z $1,000  .5   What is the beta of the portfolio?   A. 1.00   B. 1.24   C. 1.33   D. 1.15

Assume the following data for a stock: Risk - free rate market) == 1.5; beta (size) = 0.3; beta (book-to-market) = 5 percent; beta ( = - 1.1; market risk premium 1 7 percent; size risk premium 3.7 percent; and book - to - market risk premium = 5.2 percent. Calculate the expected return on the stock using the Fama - French three-factor model.