If the market return is 10%, the expected return from SBI is 16 %, and the alpha of the SBI is 2%, beta of SBI with market as per Sharpe's Single Index Model is a. 1.0 b. 0.75 c. 1.4 d. 1.25

Q: If share C has a beta of 1,3; the risk-free rate is 8% and market risk premium is 7%, what would the…

A: Step 1: Given Value for Calculation Beta = b = 1.3Risk Free rate = rf = 8%market Risk Premium = mrp…

Q: c) Assume that using the Security Market Line (SML) the required rate of return (Ra) on stock A is…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: If beta of Asian Paints is 0.6, the expected return from Asian Paints is 13 %, and the alpha of…

A: Given: Expected return = 13% Beta = 0.6 Alpha = 1%

Q: Table 2: Efficient Frontier Table Expected Return Stdev Stocks, w1 0.00 0.10 0.20 0.30 0.40 0.50…

A: For each of the given weights, we can determine the portfolio return and standard deviation using…

Q: The CRT Co. has a beta of 1.6 The expected market return is 9.5 percent and the risk free rate of…

A: Given that;Expected market return is 9.5%Risk free rate is 3.2%Beta is 1.6

Q: If the risk free rate of return is 5% and market return is 15% and the beta for the fumus 1.2. Based…

A: In this question, we are required to determine the required rate of return as per Capital Asset…

Q: Suppose that Company ABC has a beta of .92.  The expected return on the market is 13% and the market…

A: Market return (Rm) = 0.13Market risk premium (Mp) = 0.102Beta of the stock (b) = 0.92Expected return…

Q: The alpha for company 2 is 1.66. Its beta is 0.291 and the expected return on the market is 4.60%.…

A: The single index model evaluates a security's expected return and risk by examining its correlation…

Q: Mansukh

A: The beta of A is 0.45Beta of B is 1The SD of A is 0.28SD of B is 0.21SD of market is 16%.Weight of A…

Q: If the risk-free rate is 10.2% and the market risk premium is 4.4%, what is the required return for…

A: In the Given question we require to calculate the required return for the market from the following…

Q: If the expected rate of return on AZNG is 12.72, its beta is 1.09 and the market risk premium is 8%,…

A: The objective of the question is to find the risk-free rate given the expected rate of return on a…

Q: What is kd of investment whose Beta is 1.4 and market premium is 8% while risk free rate is 5%?

A: Here kd of investment means cost of investment, therefore we need to calculate cost of investment…

Q: Assume that using the Security Market Line (SML) the required rate of return (RA) on stock A is…

A: Given that;Return on market portfolio is denoted by RM.Required return on stock A is RA and the…

Q: Far Horizon Journeys has an expected return of 9.90%, the risk-free rate is 2.20%, and the market…

A: Expected Return = 9.90% Risk Free Rate = 2.20% Market Risk Premium = 6.85%   Beta = ?

Q: The information about asset X and Y are given as follows: Expected Standard Asset Return Deviation…

A: Here, Expected Return of X is 10% Standard Deviation X IS is 4% Expected Return of Y is 15% Standard…

Q: Assume that using the Security Market Line (SML) the required rate of return (RA) on stock A is…

A: Capital Asset Pricing Model (CAPM):   CAPM is the method of calculating the expected return on…

Q: Use the information provided in the table below to answer the questions that follows. (1) Average…

A: Sharpe Ratio: It represents the risk-adjusted performance of an investment. It is computed by…

Q: Asset A has an expected return of 22.8% and a beta of 1.8. The expected market return is 14%. What…

A: The risk free rate can be calculated as per the capital asset pricing model.

Q: 1. The market and Stock A have the following probability distributions: Return on Return on…

A: Coefficient of Variation = Standard Deviation / Average Return

Q: Assume that Rf = 6 percent and the market risk premium (Km - Rf) is 7.0 percent. Compute Kj for the…

A: In this question we require to compute the Kj i.e. expected return of a stock where, Rf = 6%  Market…

Q: Consider portfolio x with a beta of 1.3 and standard deviation of 25%. If the standard deviation of…

A: The portfolio will be considered as efficient or optimal if the standard deviation for the portfolio…

Q: The return of a portfolio is 11 per cent, its volatility is 15.2214 per cent, and its beta is 0.7.…

A: The Information ratio can be calculated by dividing the excess return of the portfolio by its…

Q: If a firm's beta is 1.1, the risk-free rate is 6%, and the expected return on the market is 14%,…

A: Details given are : Beta = 1.1 Risk free rate = 6% Expected market return = 14% We need to compute…

Q: The returns on share A follow the market model with coefficients aa = 0.01, ßa = 1.25. If at time t,…

A: Alpha term (a) = 0.01 Beta term (b) = 1.25 Market return (Rm) = 0.02 Actual return of A (Re) = 0.025…

Q: If E(rX)=0.12 and E(rY)=0.08, what would be the expected rate of return of a portfolio made of 30%…

A: Given the following information: Expected return from investment X = 0.12 Expected return from…

Q: The market and Stock A have the following probability distributions: Probability Return on market…

A: Data given:    Probability Return on Market  Return on Stock A   0.2 18% 16% 0.3 12% 14%…

Q: a.) Using Capital Asset Pricing Model (CAPM) to compute an appropriate rate of return for Intel…

A: In this question we are required to calculate rate of return of Intel common stock using CAPM: As…

Q: Suppose the beta of PetrolCom is 0.75, the risk - free rate is 3 percent, and the market risk…

A: The expected rate of return on a stock can be calculated using the Capital Asset Pricing Model…

Q: The expected return on Share X is 15.75% while the risk-free rate of return is 7%. If the expected…

A: Expected return =Rf + beta * ( Rm- Rf) Rf = Risk free rate Rm =Expected return on market

Q: Assume the risk free rate is 3.9% and the expected return on the market is 13%. Based on the CAPM,…

A: Given details are : Risk free rate (Rf) = 3.9% Expected market return (Rm) = 13% Beta = 1.25 From…

Q: What is the required return on an investment with a beta of 1.4 if the risk-free rate is 2.2 percent…

A: Formula:- Required return = Risk free rate + beta*(market rate- risk free rate)

Q: Assume that using the Security Market Line (SML) the required rate of return (RA) on stock A is…

A: Capital Asset Pricing Model (CAPM): CAPM is the method of calculating the expected return on…

Q: Assume that you are given the following partial covariance and correlation matrices for Securities…

A: Here,

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: ParticularsStock AStock BBeta1.201.50R-square0.250.15σM16%Weight0.700.30

Q: 9) Firm X and Y each have a beta of 1.5 and 2.5. If their expected return (cost of equity) is each…

A: CAPM = Rf + Beta ( Rm - Rf)

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.