1. 1- Calculate the beta adjusted by the degree of freedom for stock X relative to the equity market using the information from the table (performance): A 0.82 B 1.22 42.07 Year 1 2 3 4 5 6 7 D) None of the options is true X -7 -11 21 15 8 9 -2 Market 7 15 20 17 10 7 -1

1. 1- Calculate the beta adjusted by the degree of freedom for stock X relative to the equity market using the information from the table (performance): A 0.82 B 1.22 42.07 Year 1 2 3 4 5 6 7 D) None of the options is true X -7 -11 21 15 8 9 -2 Market 7 15 20 17 10 7 -1

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

1. 1- Calculate the beta adjusted by the degree of freedom for stock X relative to the equity market using the
information from the table (performance):
A
B
0.82
1.22
42.07
Year
1
2
3
4
5
6
7
None of the options is true
X
-7
-11
21
15
8
9
-2
Market
7
15
20
17
10
7
-1

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Consider the following Information: Stock Return if Market Return Is: Stock -12% 12% 12 14 C D Stock A B -12 -32 11 20 What is the beta of each of the stocks? (Leave no cells blank - be certain to enter "0" wherever required. Use decimals, not percents, in your calculations. A negative value should be indicated by a minus sign. Round your answers to 1 decimal place.) D E 22 15 Beta
2.
8. (Portfolio of two stocks) The following spreadsheet presents data for stocks A and B. A B C 1 2 RETURN STATISTICS OF STOCKS A AND B Stock A Stock B 3 Average return 15% 10% 4 Variance 0.12 0.07 5 Standard deviation 34.64% 26.46% 6 7 Covariance of return, Cov(AIB) 0.0160 0.1746 <=B7/(B5*C5) a. 8 Correlation of return What are the return and the standard deviation of a portfolio com- posed of 30% of stock A and 70% of stock B? b. What are the return and the standard deviation of an equally weighted portfolio of stocks A and B?
What is the expected return of Stock B given the information below about its returns across future states of nature? Enter return in decimal form, rounded to 4th digit, as in "0.1234"
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pm.3
onsider the following table, which gives a security analyst’s expected return on two stocks and the market index in two scenarios: Scenario Probability Market Return Aggressive Stock Defensive Stock 1 0.5 7% 2.2% 5.0% 2 0.5 15 25 12 Required: a. What are the betas of the two stocks? (Round your answers to 2 decimal places.) b. What is the expected rate of return on each stock? (Round your answers to 2 decimal places.)
Problem 2-12 (Algo) Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period. Stock Po A B P1 01 P2 02 00 140 145 145 145 145 145 135 290 130 290 130 290 270 290 280 290 145 580 C Required: Calculate the first-period rates of return on the following indexes of the three stocks (t = 0 to t = 1): Note: Do not round intermediate calculations. Round your answers to 2 decimal places. a. A market-value-weighted index. b. An equally weighted index. a. Rate of return b. Rate of return % %
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