Consider the single-index model. The alpha of a stock is 1.00%. The return on the market index is 12.75%. The risk 5.75%. The stock earns a return that exceeds the risk-free rate by 7.00%, and there are no firm-specific events affe performance. What is the beta of the stock? (Round your answer to 2 decimal places.)

Consider the single-index model. The alpha of a stock is 1.00%. The return on the market index is 12.75%. The risk 5.75%. The stock earns a return that exceeds the risk-free rate by 7.00%, and there are no firm-specific events affe performance. What is the beta of the stock? (Round your answer to 2 decimal places.)

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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Similar questions

Stock R has a beta of 2.0, Stock S has a beta of 0.35, the required return on an average stock is 9%, and the risk-free rate of return is 3%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places. %
Stock R has a beta of 1.7, Stock S has a beta of 0.8, the required return on an average stock is 13%, and the risk-free rate of return is 5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.
Stock R has a beta of 1.5, Stock S has a beta of 0.85, the required return on an average stock is 9%, and the risk-free rate of return is 3%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.
A stock has an expected return of 12.7 percent, its beta is 1.80, and the risk-free rate is 3.2 percent. What must the expected return on the market be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
U Assume CAPM holds. We know expected return and beta of two stocks: Stock A: E[ra] = 10% and beta_a = 1.5 Stock B: E[rb] = 5% and beta_b = 0.5 What would be the expected return of a stock that has a beta of 0.9? O 6.5% Ⓒ7% O 7.5% O 6% Question 5 Which of the following statements is false? o The CAPM follows from equilibrium conditions in a frictionless mean-variance economy with rational investors According to CAPM, everyone should hold a mix of the market portfolio and the risk-free asset. According to CAPM, everyone can generate positive return by buying positive alpha stocks and by selling negative alpha stocks. According to CAPM, the expected return on a stock is a linear function of its beta.
Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA= 5.0% + 1.30RM + eA RB= -2.0% + 1.6RM + eB sigmaM= 20% ; R-squareA= 0.20 ; R-squareB= 0.12 What is the standard deviation of each stock (write as percentage, rounded to 2 decimal places)?
Consider 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 6% 2.0% 5.0% 2 0.5 20 32 15 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?
Please answer fast i give you upvote.
Consider 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 6% 2.0% 5.0% 2 0.5 20 32 15 If the T-bill rate is 7%, what are the alphas of the two stocks? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
A stock has a beta of 1.14, the expected return on the market is 10.8 percent, and the risk- free rate is 4.55 percent. What must the expected return on this stock be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return %
Stock XYZ has a beta of 1.3 and an expected return (rs) of 6.5%. The risk-free rate (TRF) is currently 3.0%. What is the expected return on a portfolio that is 3/4 invested in Stock XYZ and 1/4 invested in the risk-free asset? Enter your answer as a decimal with a leading zero and 4 decimal places of precision (i.e. 0.1234)
Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 38+0.7RM + eA + eB RB-28+1.2RM OM 20%; R-squareд 0.20; R-squareg = 0.12 What is the standard deviation of each stock? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Stock A Stock B = Standard Deviation % %

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