Calculate the expected return for Stock A.

Q: How do an investment's required rate of return vary with perceived risk? Explain with an example?

A: Required rate of return refers to the rate which the investors expects from their investments. This…

Q: What is the formula to find an expected in returns in CAPM

A: In this question, we are required to determine the formula for expected return in Capital Asset…

Q: How to figure out price targets for stocks by charting

A: One of the most typical ways to create a target price is to first identify a technical chart…

Q: Define the term Risk-free real return?

A: Risk-free real return is a hypothetical number that mirrors the foreseen return on a venture that…

Q: Define average stock’s beta

A: Beta tells about the change in stock’s return given to change in market risk.

Q: In the context of the Capital Asset Pricing Model (CAPM), the relevant measure of risk is A.…

A: As per CAPM, Expected Return = Risk free Rate + Beta * Market Risk Premium

Q: The Capital Asset Pricing Model (CAPM) asserts that an asset’s expected return is equal to the…

A: Based on CAPM, Expected return on security = Risk free rate + Beta * Market risk premium

Q: What stock valuation models are available?

A: The stock valuation models as follows: Absolute valuation: This method mostly emphases on finding…

Q: When would I use the arithmetic average risk premium (as opposed to the geometric risk premium)?

A: The arithmetic average risk premium is calculated as the difference between the average return of an…

Q: Another name for the expected value of an investment would be: a. The mean value b. The risk-free…

A: The expected value (EV) is an anticipated value for investment at some point in the future. In…

Q: Describe the capital asset pricing model and explain the role of beta as a risk measurement tool.

A: Answer

Q: Explain the relationship between JENSEN's alpha and the security marketline of the Capital asset…

A: Jansen alpha indicates that how much risk adjusted returns by portfolio has been achieved by above…

Q: Suppose that you have to choose an optimal portfolio from a list of n stocks. Stock i has expected…

A: The minimum variance portfolio:A rational investor is a person who invests in a portfolio on the…

Q: Describe two conditions which will determine whether or not a stock is in equilibrium. Can either of…

A: Equilibrium refers to a state of rest or a situation where demand is equal to supply. At point of…

Q: Why is beta the theoretically correct measure of a stock’s risk?

A: Introduction: Risk refers to the degree of volatility involved in the anticipated return on…

Q: How do you calculate the beta of stock?

A: Beta is the measure of stock's volatility to the overall market, and is calculated as-

Q: What is the Capital Asset Pricing Model (CAPM)? Derive the risk premium when beta is between 0 and…

A: Stock valuation is a quantitative approach that an analyst or management of the company undergoes…

Q: how is price oc preffered stock gotten

A: The cost of preferred stock is determined by the dividend payment divided by the net proceeds per…

Q: a) discuss the relationship between the up-factor (u), down-factor (d), risk-free rate (r), and…

A: In the binomial model, the up-factor (u) and down-factor (d) represent the possible movements of an…

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.