There is a 25% chance the stock market will return 10% next year. There is a 35% chance the stock market will return 6%. There is a 40% chance the stock market will return -8% next year. What is the expected return of the stock market next year? please show work a. 8 b. 7.8 c. 2.2 d. 1.4

Q: Consider $10m invested in a stock. The annual volatility of the rate of return is 25%. Assuming that…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: The risk-free rate is 3.9% and you believe that the S&P 500's excess return will be 9.7% over the…

A: Solution: Given, Risk free rate =Rf = 3.9% S&P 500's excess return= Expected market return = Rm…

Q: We know that during the last 10 years, the average historical return on a market index is 15%. We…

A: Given: Market index return 15% Inflation rate 3% Risk free rate 6%

Q: 6. You currently own a technology stock that has an expected return of 14.9% and its beta is 1.44.…

A: CAPM is the basic theory that links risk and return for all assets. CAPM equation is  rs =Rf…

Q: Your broker has developed a list of firms, their betas, and the return he expects the stock to yield…

A: Capital Asset Pricing Model (CAPM) is an alternative model to find out the cost of equity or the…

Q: The expected return on the market is 11% and the standard deviation of returns on the market is…

A: The standard deviation of risk free asset = 0%

Q: Solve for the unknown interest rate in each of the following (Do not round intermediate…

A: Example for first: Nper = Number of years: 4 PV = Present value: -300 FV = future value: 380 CPT:…

Q: Beta Expected Return ABC 1.05 XYZ 0.90 Suppose you observe the following situation: Assume these…

A: In the given case, beta  and the expected return of each security is given. So, the risk free rate…

Q: Compute the expected return given these three economic states, their likelihoods, and the potential…

A: The expected return is calculated with the help of following formula  Expected Return = R1 × P1 + R2…

Q: 2- I know that the expected HPR for a one-year investment on stock EMKA is 12%. According to our…

A: Expected HPR is calculated by following formula:-Expected HPR = whereP= probabilityHPR = holding…

Q: Find the intrinsic value of the stock stabili

A: The projected or computed value of a business, stock, money, or product that is ascertained via…

Q: Suppose that Do = $1.00 and the stock's last closing price is $26.25. It is expected that earnings…

A: Here,D0 is $1.00Current price is $26.25Growth Rate is 5%Required Rate of Return is 9%

Q: Problem 8.12 (Required Rate of Return) Suppose FRF = 6%, PM = 12%, and b; = 1.5. a) What is ri, the…

A: The expected return is the estimation of profit or loss that an investor determine from his…

Q: c) What are the beta of the two stocks? d) Based on your calculation in b and c, which stock is…

A: Expected return E(r) = ∑p*r Standard deviation = √∑p*(r-E(r))2  Standard deviation measures the…

Q: Assume that the risk-free rate is 6% and the required return on the market is 10%. What is the…

A: The formula used as follows: Required rate of return=rRF+Beta rM-rF

Q: q4- The expected return on the market is 11% and the standard deviation of returns on the market is…

A: Expected return is the expected value on the investment which is expressed in percentage terms based…

Q: F1 please help.....

A: The expected return is the anticipated number of returns that a portfolio may generate. Variance is…

Q: Fools Gold Mining Company is expected to pay a dividend of $8 in the upcoming year. Dividends are…

A: Solution: Given,  Risk free rate = Rf = 6% Expected return on the market portfolio = Rm = 14% Beta…

Q: Assume CAPM is a correct model. Stock A's required rate of return is 12% and Stock B's required rate…

A: Stock -A Required rate of return is 12% Beta 1.2 Stock -B Required rate of return is 12% Beta 1.2…

Q: Suppose the risk-free rate is 5%. The expected return and standard deviation of a risky asset are…

A: Here,Risk Free Rate is 5%Expected Return of Risky Asset is 10%Standard Deviation of Risky Asset is…

Q: You have been scouring The Wall Street Journal looking for stocks that are "good values" and have…

A: To solve this question we will apply the concept and theory of CAPM here.CAPM stands for Capital…

Q: YEAR 2018 2019 2020 2021 2022 R(BOA) 28% 24% -6% 23% 20% R(WF) 26% 25% -9% 21% 26% Calculate the…

A: ER= Return*ProbabilityVariance = probability* deviation^2standard deviation= square root of variance

Q: am. 134.

A: Step 1: Identify the formula for expected value of a probability distributionexpected value of a…

Q: you observe the following situation: Security Peat Company Re-Peat Company Beta 1.70 0.85 Expected…

A: As per CAPM,Required return = Rf+[β∗MRP]Where Rf = risk free rateβ = BetaMRP = Market risk…

Q: Question 5 a) How do financial institutions help individuals to diversify their portfolio risks?…

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…

Q: unit 8- 7

A: I'll use the Capital Asset Pricing Model (CAPM) to assist you with this challenge.Part (a): We'll…

Q: Assume the following states of the world could exist in the economy tomorrow. Find the expected…

A: The expected return for the stock is the sum of (Probability* Return in a particular state). This is…

Q: 1. Problem 8.11 (CAPM and Required Return) eBook H Problem Walk-Through Calculate the required rate…

A: The expected return is the estimation of profit or loss that an investor determines from his…

Q: the stock of Company J against the raw cent and a beta of 1.50. If the risk-free rate then determine…

A: Jensen's Alpha is a measure of a stock's risk-adjusted performance, which compares the stock's…

Q: The resident Economist in the Investment Firm you work for has generated th following expected…

A: The Capital Asset Pricing Model is a popular financial model that analysts and investors use to…

Q: 29. In economic theory, a “hurdle rate" is the minimum return that a person requires before he or…

A: The provided information are: Meanμ=12%Population standard devaitionσ=18% Consider X be the random…

Q: Assume the following states of the world could exist in the economy tomorrow. Find the expected…

A: Stocks and securities are used in the business for raising finance. Combination of stocks and…

Q: sa.3

A: All stocks (100 shares)For $80: 100×80=8000For $100: 100×100=10000For $110: 100×110=11000For $120:…