7) The historical nominal returns for stock A were -8 percent, +10 percent, and +22 percent.The nominal returns for the market portfolio were +6 percent, +18 percent, and 24 percentduring this same time. Calculate the beta for stock A.A) 1.64B) 0.61C) 1.00D) 0.508) Which of the following is a statement of semi-strong form efficiency?I) Stock prices will adjust immediately to public information.II) Stock prices reflect all information.III) Stock prices will adjust to newly published information after a long time delay.A) I onlyB) II onlyC) II and III onlyD) III only9) A put option on ABC stock currently sells for $4.00. The exercise price and the stock priceis $60. The put option has a delta of 0.5. If within a short period of time the stock price increasesto $60.10, what would be the change in the price of the put option?A) Increases by $0.05B) Decreases by $0.05C) Increases by $0.10D) Decreases by $0.10

"Since you have asked multiple question, we will solve the first question for you. If you want any…

7) The historical nominal returns for stock A were -8 percent, +10 percent, and +22 percent. The nominal returns for the market portfolio were +6 percent, +18 percent, and 24 percent during this same time. Calculate the beta for stock A. A) 1.64 B) 0.61 C) 1.00 D) 0.50

7) The historical nominal returns for stock A were -8 percent, +10 percent, and +22 percent. The nominal returns for the market portfolio were +6 percent, +18 percent, and 24 percent during this same time. Calculate the beta for stock A. A) 1.64 B) 0.61 C) 1.00 D) 0.50

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

7) The historical nominal returns for stock A were -8 percent, +10 percent, and +22 percent.
The nominal returns for the market portfolio were +6 percent, +18 percent, and 24 percent
during this same time. Calculate the beta for stock A.
A) 1.64
B) 0.61
C) 1.00
D) 0.50
8) Which of the following is a statement of semi-strong form efficiency?
I) Stock prices will adjust immediately to public information.
II) Stock prices reflect all information.
III) Stock prices will adjust to newly published information after a long time delay.
A) I only
B) II only
C) II and III only
D) III only
9) A put option on ABC stock currently sells for $4.00. The exercise price and the stock price
is $60. The put option has a delta of 0.5. If within a short period of time the stock price increases
to $60.10, what would be the change in the price of the put option?
A) Increases by $0.05
B) Decreases by $0.05
C) Increases by $0.10
D) Decreases by $0.10

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