The following shows beta for several companies. Calculate each stock’s expected rate of return using CAPM, assuming the risk free rate is 4% and the risk premium for the market portfolio is 7%. What is your portfolio beta if you construct an equally weighted portfolio using all stocks? What can you say about this portfolio relative to the market? Stock                                  Beta Apple                                 1.35 Johnson & Johnson        0.69 IBM                                     1.10

Q: Suppose Intel stock has a beta of 0.81, whereas Boeing stock has a beta of 1.11. If the risk-free…

A: Here, Beta of I Stock is 0.81 Beta of B Stock is 1.11 Risk Free Interest Rate is 5.2% Expected…

Q: Consider a portfolio consisting of the following three stocks: The volatility of the market…

A: By using the CAPM approach, the expected return of the stock is calculated. A portfolio consists of…

Q: Suppose you have a portfolio that has $290 in stock A with a beta of 1.04, $1, 160 in stock B with a…

A: Beta of portfolio is computed as follows:-Bp = (Ba*Wa)+(Bb*Wb)+(Br*Wr)+(Bs*Ws)whereBp =beta of…

Q: Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 8.50%, and the risk-free…

A: Fiske Roofing Supplies stock has beta 1.23, required return is 8.50% risk free rate is 4.30% , then…

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Q: a) Assuming Treasury bills yield is 1% and the market risk premium is 7%. If your portfolio beta is…

A: Note: Hi! Thank you for the question, As per the Honor code, we are allowed to answer one question…

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A: Introduction : Risk free rate =4% Market risk  premium = 5% Beta coefficient =2.0 Using CAPM…

Q: Consider the following simplified APT model: Factor Market Expected Risk Premium (%) Interest rate…

A: FactorExpected risk premiumMarket6.20%Interest rate-0.80%Yield spread4.80%MarketInterest rateYield…

Q: Target Corporation stock has a beta of 1.25, and Walmart stock has a beta of 0.5. If the expected…

A: The expected return for each stock is calculated using following CAPM(Capital asset pricing model)…

Q: what is the stock's predicted return

A: Market return is 10%return on the SMB portfolio (rSMB) is 2.0 return on the HML portfolio (rHML) is…

Q: Assume the following information about the market and Lithium Motors Stock.​ Lithium's beta​ = 1.80,…

A: Beta (b) = 1.80 Risk free rate (Rf) = 0.025 Market risk premium (Mp) = 0.08 Expected return = ?…

Q: (b) Write the equation of the Security Market Line (SML). Compute and draw the SML when the expected…

A: We will be solving the question b i.e. the security Market Line , Compute and draw the SML when the…

Q: Assume that the risk-free rate is 3.6% and the market risk premium is 4%. What is the required rate…

A: Risk-Free Rate = 3.6%Market Risk Premium = 4%Beta = 1.4

Q: You've assembled the following portfolio: Stock Expected return Beta Portfolio weight 1 0.128 1.8…

A: Beta is primarily used to calculate the systematic risk in the capital asset pricing model. The beta…

Q: The following are estimates for two stocks. Stock A B Expected Return 0.16 0.19 Beta 0.84 1.23…

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Q: a. What is the market risk premium? Show your work. b. What is the cost of equity for XYZ? Show your…

A: Please note that only 1 question can be solved under the Answering Guidelines. The solution to stock…

Q: Stock J has a beta of 1.37 and an expected return of 14.01%. Stock K has a beta of .92 and an…

A: Beta of portfolio.Bp = (Bj * Wj)+(Bk*Wk)whereBp = beta of portfolioBj = beta of stock JBk = beta of…

Q: Stock X has a beta of 2.5 and an expected return of 22.5%. Stock Y has a beta of 1.5 and an expected…

A: Stock XStock YExpected return22.5%15.0%Beta2.51.5Market risk premium7.2%

Q: Find risk free rate and expected return of market portfolio based on the following information -…

A: Expected return (CAPM) = Rf+β*Rp.Rf = Risk free rate.Rp = Risk premium.

Q: Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 9.50%, and the risk-free…

A: Stock beta is 1.23 Required return is 9.50% risk free rate is 4.30%   To Find: Required rate of…

Q: Adam wants to determine the required return on a stock portfolio with a beta coefficient of 0.5.…

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

Q: Suppose the risk-free return is 2.3% and the market portfolio has an expected return of 11.7% and a…

A: Beta = (Correlation with market x Volatility of stock)/ Volatility of marketBeta = (0.045 x 17.3)/…

Q: Company A has a beta of 0.9 , while Company B's beta is 1.4 . The market risk premium is 13.78 %,…

A: The Capital Asset Pricing Model (CAPM) illustrates the relationship between systematic risk, or the…

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

A: The standard deviation of a portfolio is a statistical measure of the variability or volatility of…

Q: Suppose intel stock has a beta of 0.80, whereas Boeing stock has a beta of 1.15. If the risk-free…

A: Intel Beta = ib = 0.89 Boeing Beta = bb = 1.15 Risk free rate = rf = 3.1% Market return = rm = 10.1%

Q: A stock as a beta of 0.9 and the market expects to return 12.0%. If the risk free rate is 2.0%, what…

A: CAPM is the capital assets pricing model used to calculate the required rate of return based on the…