a. Fill in the missing values in the table. (Leave no cells blank- be certain to enter O wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g. 32.16.) Fim A The market po The O Buy O Sell Expected num Expected Return 0119 0.131 0112 0.12 0.05 Expected Standard Deviation O Buy O Sell 0.22 With the market portfolio b-1. What is the expected return of Firm A? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g. 32.16.) 0.75 0.19 Correlatee" b-2. What is your investment recommendation regarding Firm A for someone with a well- diversified portfolio? O Sell O Buy 041 0.26 b-3. What is the expected retum of Firm 87 (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, eg, 32.16.) Bata b-4. What is your investment recommendation regarding Firm B for someone with a well- b-5. What is the expected return of Firm C? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g. 32.16.) 1.50 b-6. What is your investment recommendation regarding Firm C for someone with a well- diversified portfolio?
a. Fill in the missing values in the table. (Leave no cells blank- be certain to enter O wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g. 32.16.) Fim A The market po The O Buy O Sell Expected num Expected Return 0119 0.131 0112 0.12 0.05 Expected Standard Deviation O Buy O Sell 0.22 With the market portfolio b-1. What is the expected return of Firm A? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g. 32.16.) 0.75 0.19 Correlatee" b-2. What is your investment recommendation regarding Firm A for someone with a well- diversified portfolio? O Sell O Buy 041 0.26 b-3. What is the expected retum of Firm 87 (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, eg, 32.16.) Bata b-4. What is your investment recommendation regarding Firm B for someone with a well- b-5. What is the expected return of Firm C? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g. 32.16.) 1.50 b-6. What is your investment recommendation regarding Firm C for someone with a well- diversified portfolio?
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
Transcribed Image Text:You have been provided the following data about the securities of three firms, the
market portfolio, and the risk-free asset
a. Fill in the missing values in the table. (Leave no cells blank be certain to enter O
wherever required. Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.)
Security
Fimm A
Fim B
Fim C
The market portfolio
The risk-fres asset
Expected retum
O Buy
O Sell
Expected retum
Expected Return
0.119
0.131
O Buy
ⒸSell
0.112
0.12
0.05
With the market portfolio
b-1. What is the expected return of Firm A? (Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.)
Expected retum
Standard Deviation
0.22
b-2. What is your investment recommendation regarding Firm A for someone with a well-
diversified portfolio?
O Sell
O Buy
0.75
0.19
Correlation
b-3. What is the expected return of Firm B? (Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
0.41
0.26
%
Bata
b-4. What is your investment recommendation regarding Firm B for someone with a well-
diversified portfolio?
b-5. What is the expected return of Firm C? (Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.)
b-6. What is your investment recommendation regarding Firm C for someone with a wel
diversified portfolio?
0.95
1.50
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