If the risk free rate is 4 %, the expected return on the market portfolio is 1296 and the beta of Stock Bis 0.5. what is the required rate of return for Stock B according to the Capital Asset Pricing Model (CAPM]? (Round your answer rounded to one decimal place and record without a percent sign). If the return on stock A in year 1 was 19 %, in year 2 was 4 %, in year 3 was 9 % and in year 4 was 17 %, what was the average annual retum for stock A over this four year period? If the return on stock A in year 1 was -4 , in year 2 was -7 %, in year 3 was 20 % and in year 4 was 1 %, what was the standard deviation of returns for stock A over this four year period? (Round your answer to 1 decimal place and record without a percent sign. If your final answer is negative, place a minus sign before the number with no space between the sign and the number).
If the risk free rate is 4 %, the expected return on the market portfolio is 1296 and the beta of Stock Bis 0.5. what is the required rate of return for Stock B according to the Capital Asset Pricing Model (CAPM]? (Round your answer rounded to one decimal place and record without a percent sign). If the return on stock A in year 1 was 19 %, in year 2 was 4 %, in year 3 was 9 % and in year 4 was 17 %, what was the average annual retum for stock A over this four year period? If the return on stock A in year 1 was -4 , in year 2 was -7 %, in year 3 was 20 % and in year 4 was 1 %, what was the standard deviation of returns for stock A over this four year period? (Round your answer to 1 decimal place and record without a percent sign. If your final answer is negative, place a minus sign before the number with no space between the sign and the number).
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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Concept explainers
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.
Question
Transcribed Image Text:If the risk free rate is 4 9%, the expected return on the market portfolio is 1296 and the beta of Stock B is 0.5.
what is the required rate of return for Stock B according to the Capital Asset Pricing Model (CAPM)? (Round
your answer rounded to one decimal place and record without a percent sign).
If the return on stock A in year 1 was 19 %, in year 2 was 4 %, in year 3 was 9 % and in year 4 was 17 %,
what was the average annual return for stock A over this four year period?
If the return on stock A in year 1 was -4 %, in year 2 was -7 %, in year 3 was 20 % and in year 4 was 1 9%,
what was the standard deviation of returns for stock A over this four year period? (Round your answer to 1
decimal place and record without a percent sign. If your final answer is negative, place a minus sign before
the number with no space between the sign and the number).
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