Stock Y has a beta of 1.2 and an expected return of 15.3 percent. Stock Z has a beta of .8 and an expected return of 10.7 percent. If the risk-free rate is 6 percent and the market risk premium is 7 percent, the reward-to-risk ratios for Stocks Y and Z are and the SML reward-to-risk is percent, Stock Y is percent, respectively. Since and Stock Z is (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

vv. Subject :- Accounting

Problem 10-11 Suppose that the market can be described by the following three sources of systematic risk with associated risk premiums. Risk Premium 6% 2% 5% Factor Industrial production (I) Interest rates (R) Consumer confidence (C) The return on a particular stock is generated according to the following equation: r=15% +1.4/+0.7R+0.90C+ e a-1. Find the equilibrium rate of return on this stock using the APT. The T-bill rate is 7%. (Do not round intermediate calculations. Round your answer to 1 decimal place.) Equilibrium rate of return a-2. Is the stock over- or underpriced? O Underpriced Overpriced %

Problem 13-19 Reward-to-Risk Ratios [LO4] Stock Y has a beta of 1.4 and an expected return of 15.2 percent. Stock Z has a beta of 7 and an expected return of 9.1 percent. What would the risk-free rate have to be for the two stocks to be correctly priced? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Risk-free rate % 24

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Question 4 The risk-free rate of return is 2.7 percent, the inflation rate is 3.1 percent, and the market risk premium is 6.9 percent.What is the expected rate of return on a stock with a beta of 1.08?Select one:A. 12.22 percentB. 11.47 percentC. 10.15 percentD. 10.92 percent

Question 16 RWJ 13-2  CF   Stock COOL has an expected return of 10.47 %. The expected market return is 8.31% and the risk-free rate is 4.73%. What is asset COOL’s beta? Question 17 RWJ 13-4 Joe is an analyst with Pomona Securities. His research shows that CPP Enterprises has an expected return of 12%. He also estimated the required rate for return using the Security Market Line for CPP Enterprises to be 10.30%. CPP Enterprises is: Group of answer choices Fairly priced Underpriced Overpriced CPP Enterprises is a bad investment

QUESTION 1 Exhibit 5.5 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)   Stock Rit Rmt ai Beta A 10.6 15 0 0.8 Z 9.8 8.0 0 1.1   Rit = return for stock i during period t Rmt = return for the aggregate market during period t   Refer to Exhibit 5.5. What is the abnormal rate of return for Stock A during period t using only the aggregate market return (ignore differential systematic risk)?   a. 4.40   b. −1.70   c. 3.40   d. −4.40   e. −1.86

Problem 8-14 Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 4.0% +0.50RM + eA RB = -1.2% + 0.70RM + eB OM 17%; R-squareд = 0.26; R-squareg = 0.18 Assume you create a portfolio Q, with investment proportions of 0.40 in a risky portfolio P, 0.35 in the market index, and 0.25 in T-bill. Portfolio Pis composed of 70% Stock A and 30% Stock B. a. What is the standard deviation of portfolio Q? (Calculate using numbers in decimal form, not percentages. Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Standard deviation 10.98 c. What is the "firm-specific" risk of portfolio Q? (Calculate using numbers in decimal form, not percentages. Do not round intermediate calculations. Round your answer to 4 decimal places.) Firm-specific % Answer is complete but not entirely correct. 0.0025 x

Problem 8.13 (CAPM, Portfolio Risk, and Return) Consider the following information for stucks A, B, and C. The returns on the three stocks positively correlated, but they are not perfectly correlated. That is, each of the correlation Coefficients is between 0 and 1₁) ame Stock Expected Return Stendanction Beta A 6.25% 15% 0.7 B 7.50 15 8.50 15 C 112 1.6 Find P has one-third of its funds invested of each of the three stocks. The risk-free rate is 4.5%, and the market is in equilibrium. (That is required returns equal expected returns) a) What is the market risk premium (YM-XRF)? 5) What is the beta of Fund P? c) What is the required return of Fund P?