QUESTION 37You have developed the following data on three stocks:StocksStd. DeviationBetaA0.450.60B0.600.75C0.551.50If you are a risk minimizer, you should choose Stocka well-diversified portfolio.if it is to be held in isolation and Stockif it is to be held as part ofA; AO B; AC; AO A; CO C; B3.75 po13

To determine which stock to choose for isolation and which one to choose for a well-diversified…

Answered: QUESTION 37 You have developed the…

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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Question 4 A stock has an expected return of 13.6 percent, the risk - free rate is 3.7 percent, and the market risk premium is 7.1 percent. What must the beta of this stock be?
The beta coefficient A stock’s contribution to the market risk of a well-diversified portfolio is called Q1. ______risk. It can be measured by a metric called the beta coefficient, which calculates the degree to which a stock moves with the movements in the market. Q2. Based on your understanding of the beta coefficient, indicate whether each statement in the following table is true or false: Statement True False Over time, a stock with a beta of 1.0 produces a return that goes up and down with a 1:1 relationship with the return on the market. Beta measures the volatility in stock movements relative to the market. A stock that is more volatile than the market will have a beta of less than 1.0. Q1. Option 1 Unsystematic or Option 2 Relevant. Please provide true or false answers. Thank you!
You have the following data on three stocks: Stock Standard Deviation Beta A 20% 0.59 B 10% 0.61 C 12% 1.29 If you are a strict risk minimizer, you would choose Stock ____ if it is to be held in isolation and Stock ____ if it is to be held as part of a well-diversified portfolio. Group of answer choices A; A. A; B. C; A. B; A.
1. 1- Calculate the beta adjusted by the degree of freedom for stock X relative to the equity market using the information from the table (performance): A B 0.82 1.22 42.07 Year 1 2 3 4 5 6 7 None of the options is true X -7 -11 21 15 8 9 -2 Market 7 15 20 17 10 7 -1
24 - Stock A's beta is 1.7 and Stock B's beta is 0.7. Which of the following statements must be true about these securities? (Assume both stocks are at their market equilibriums.) Stock B must be a more desirable addition to a portfolio than A. Stock A must be a more desirable addition to a portfolio than B. The expected return on Stock A should be greater than that on B. The expected return on Stock B should be greater than that on A. When held in isolation, Stock A has more risk than Stock B.
only typed answer Stock A's stock has a beta of 1.30, and its required return is 15.25%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) Select the correct answer. a. 11.15% b. 11.18% c. 11.21% d. 11.24% e. 11.27%
What is the standard deviation of a portfolio formed of shares A and B? Asset (A) E(R₂) = 9% SDA = 4% W₁ = 0.4 Select one: A. 4.99% B. 4.56% C. 3.68% D. 5.16 Asset (B) E(R₂) = 11% SDB = 6% WB = 0.6 COVA, B = 0.0011
QUESTION 7 An investor wishes to construct a portfolio consisting of a 70 percent allocation to a stock index and a 30 percent allocation to a risk-free asset. The return on the risk-free asset is 4.5 percent, and the expected return on the stock index is 12 percent. Calculate the expected return on the portfolio. a. 16.50 percent b. 17.50 percent c. 14.38 percent d. 9.75 percent e. 8.25 percent
A4 answer the questions below
Question 3 A portfolio consisting of 5 securities could have its beta factor computed Security % of portfolio Beta factor of A B с D E 20 10 15 20 35 security 0.90 1.25 1.10 1.15 0.70 as follows: Weighted beta factor 0.180 0.125 0.165 0.230 0.245 If the risk-free rate of return is 12% and the expected return on the market is 20%. Determine the expected return of this portfolio.
27. You have developed the following data on three stocks:Stock Standard Deviation BetaA 0.15 0.79B 0.25 0.61C 0.20 1.29 If you are a risk minimizer, you should choose Stock ____ if it is to be held in isolation and Stock ____ ifit is to be held as part of a well-diversified portfolio.a. A; Ab. A; Bc. B; Ad. C; Ae. C; B
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