a. Calculate the average rate of return for each stock during the 5-year period. Do not round intermediate calculations. Round your answers to two decimal places. Stock A: 12.40 % Stock B: 12.40 % b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? Do not round intermediate calculations. Round your answers to two decimal places. Negative values, if any, should be indicated by a minus sign.

a. Calculate the average rate of return for each stock during the 5-year period. Do not round intermediate calculations. Round your answers to two decimal places. Stock A: 12.40 % Stock B: 12.40 % b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? Do not round intermediate calculations. Round your answers to two decimal places. Negative values, if any, should be indicated by a minus sign.

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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Using the CAPM, estimate the appropriate required rate of return for the three stocks listed here, given that the risk-free rate is 6 percent and the expected return for the market is 14 percent. STOCK ВЕТА A 0.62 B 1.09 1.48 a. Using the CAPM, the required rate of return for stock A is %. (Round to two decimal places.) b. Using the CAPM, the required rate of return for stock B is %. (Round to two decimal places.) c. Using the CAPM, the required rate of return for stock C is %. (Round to two decimal places
An analyst gathered the following information for a stock and market parameters: stock beta = 1.42; expected return on the Market = 11.41%; expected return on T-bills = 2.12%; current stock Price = $9.64; expected stock price in one year = $12.81; expected dividend payment next year = $1.54. Calculate the required return for this stock. Please share your answer as a percentage rounded to 2 decimal places.
A stock will pay a dividend of $3.5 and is expected to sell for $87.8 in one year. If the current price is$19.4, what is the return. Answer as a percent. Answer:
Suppose you are attempting to value a 1-year expiration option on a stock with volatility (i.e., annualized standard deviation) of σ = 0.34. What would be the appropriate values for u and d if your binomial model is set up using: 1 period of 1 year. 4 subperiods, each 3 months. 12 subperiods, each 1 month.
Consider the following information on a particular stock:Stock price = $88Exercise price = $84Risk-free rate = 5% per year, compounded continuouslyMaturity = 11 monthsStandard deviation =53% per year. What What is the delta of a call option?
A portfolio is invested 22 percent in Stock G, 26 percent in Stock J, with remainder in Stock K. The expected returns on these stocks are 8.58 percent, 11.55 percent, and 13.05 percent, respectively. What is the portfolio's expected return? Answer to two decimals.
given a stock with a current price of 85.50, exercise price of 83.75, put price of 2.60, call price of 4.52, risk ree rate of 0.025, and days in a year of 365, what is the expiration date of the stock?
Consider an example. Assume a share of preferred stock with the following characteristics: Par value $100 Dividend rate 3.0% per year Payment schedule semiannual Maturity date You are analyzing this preferred stock for possible purchase. Your required rate of return on this stock is 5% per year, compounded semiannually. Draw a time line showing the expected dividends for this preferred stock. Calculate the value of this preferred stock based on the required rate of return. Assume that the current market price for this preferred stock is $75 per share. Calculate the expected return based on the market price. Should you invest in the stock? Why or why not? Be sure to use your results from BOTH parts B and C above. You are analyzing a share of XYZ…
(Computing rates of return) From the following price data, compute the annual rates of return for Asman and Salinas. Time 1 2 3 12 4 14 (Click on the icon in order to copy its contents into a spreadsheet.) How would you interpret the meaning of the annual rates of return? Asman $9 11 Salinas $30 27 32 36 The rate of return you would have earned on Asman stock from time 1 to time 2 is %. (Round to two decimal places.)
An analyst gathered the following information for a stock and market parameters: stock beta= 1.08; • expected return on the Market = 11.97%; • expected return on T-bills = 1.55%; • current stock Price = $9.01; • expected stock price in one year = $11.14; • expected dividend payment next year = $3.23. Calculate the expected return for this stock. Please share your answer as a percentage rounded to 2 decimal places.
a. If your required rate of return is 7.60percent, what is the value of the stock for you? b. Should you make the investment
You are considering an investment in either individual stocks or a portfolio of stocks. The two stocks you are researching, Stock A and Stock B, have the following historical returns: Year rA rB 2014 -20.00% -5.00% 2016 42.00 15.00 2017 20.00 -13.00 2018 -8.00 50.00 2019 25.00 12.00 a. Calculate the average rate of return for each stock during the 5-year period. b. Suppose you had held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period? c. Calculate the standard deviation of returns for each stock and for the portfolio. d. Suppose you are a risk-averse investor. Assuming Stocks A and B are your only choices, would you prefer to hold Stock A, Stock B, or the portfolio? Why?

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