Given: E(R1) = 0.13 E(R2)=0.18 E(01) = 0.03 E(σ 2) = 0.06 Calculate the expected returns and expected standard deviations of a two-stock portfolio having a correlation coefficient of 0.70 under the conditions given below. Do not round intermediate calculations. Round your answers to four decimal places. a. w 1 = 1.00 Expected return of a two-stock portfolio: Expected standard deviation of a two-stock portfolio: b. w 1 = 0.70 Expected return of a two-stock portfolio: Expected standard deviation of a two-stock portfolio: C. W 1 = 0.45 Expected return of a two-stock portfolio: Expected standard deviation of a two-stock portfolio: d. w1 = 0.30 Expected return of a two-stock portfolio: Expected standard deviation of a two-stock portfolio: e. w 1 = 0.05 Expected return of a two-stock portfolio: Expected standard deviation of a two-stock portfolio: Choose the correct risk-return graph for weights from parts (a) through (e) when ri,j = -0.70; 0.00; 0.70. The correct graph is -Select-

Consider the probability distribution p(s) of the returns rA and rB of two securities A and B: state p(s) rA rB роог 0.2 0.1 0.16 medium 0.5 0.2 0.1 доod 0.3 0.3 0.05 Calculate the covariance oAB between rA and rB. The correct answer (up to four decimals is) Select one: GAB = 0.0013 GAB = -0.0027 GAB = -0.0102 None of the above

Consider the following information: a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Compute the abnormal rates of return for the following stocks during period t (ignore differential systematic risk): Stock % % % % BFT % B F T UE Rit = return for stock i during period t Rmt = return for the aggregate market during period t Use a minus sign to enter negative values, if any. Round your answers to one decimal place. ARBE: ARF: ARTI: ARC: AREL: с Rit 11.5% 9.2 12.5 12.5 15.9 Rmt 4.7% 6.2 6.6 15.2 11.1

Stocks A and B have the following probability distributions of expected future returns: a. Calculate the expected rate of return, B, for Stock B (A = 12.50%.) Do not round intermediate calculations. Round your answer to two decimal places. % b. Calculate the standard deviation of expected returns, GA, for Stock A (σ = 20.90%.) Do not round intermediate calculations. Round your answer to two decimal places. % Now calculate the coefficient of variation for Stock B. Do not round intermediate calculations. Round your answer to two decimal places. Is it possible that most investors might regard Stock B as being less risky than Stock A? I. If Stock B is more highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense. II. If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a portfolio sense. III. If Stock B is less highly correlated with…

The slope of a regression line when the return on an individual stock's returns are regressed on the return on the market portfolio, would be: OAR BR-₁ B OC none of the answers listed here. ODO im

Expected Returns: Discrete Distribution The market and Stock J have the following probability distributions: Probability rM rJ 0.3 15% 20% 0.4 9 7 0.3 18 10 Calculate the expected rates of return for the market and Stock J. Round your answers to one decimal place. Expected rate of return (Market): % Expected rate of return (Stock J): % Calculate the standard deviations for the market and Stock J. Do not round intermediate calculations. Round your answers to two decimal places. Standard deviation (Market): % Standard deviation (Stock J): %

You are given the following information: Probability of State of Economy Return on Return on State of Stock J Stock K Economy Bear .28 -.023 .031 Normal Bull .63 .135 .059 .09 .215 .089 a. Calculate the expected return for each of the stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation for each of the stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the covariance between the returns of the two stocks? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .321616.) d. What is the correlation between the returns of the two stocks? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .3216.) a. Stock J expected return 9.80 % Stock K expected return 5.39% b. Stock J standard deviation Stock K standard deviation c.…

Refer to the graph below, what is the beta of portfolio X under CAPM? E(r) A 0.14 0.10 0.06 N Beta of portfolio X = place) M X o(r) (to the nearest 1 decimal

Astromet is financed entirely by common stock and has a beta of 1.20. The firm pays no taxes. The stock has a price-earnings multiple of 11.0 and is priced to offer a 10.9% expected return. The company decides to repurchase half the common stock and substitute an equal value of debt. Assume that the debt yields a risk-free 4.6%. Calculate the following: Required: a. The beta of the common stock after the refinancing b. The required return and risk premium on the common stock before the refinancing c. The required return and risk premium on the common stock after the refinancing d. The required return on the debt e. The required return on the company (i.e, stock and debt combined) after the refinancing If EBIT remains constant: f. What is the percentage increase in earnings per share after the refinancing? g-1. What is the new price-earnings multiple? g-2. Has anything happened to the stock price? Complete this question by entering your answers in the tabs below. Reg A to E Reg F to G2…