Two investment advisors are comparing performance Advisor A averaged a 17% return with a portfolio beta of 1.5 andAdvisor B averaged a 15% return with a portfolio beta of 1.2. If the T-bill rate was 5% and the market return during the perwas 13%, which advisor was the better stock picker?Advisor B was better because he achieved a good return with a lower betaAdvisor Awas netter because he generated a larger alphaAdvisor A was better because he generated a higher retumAdvisor B was better because he generated a larger alpha

Alpha is the excess return that an investment could generate over and above the required returns as…

Two investment advisors are comparing performance Advisor A averaged a 17% return with a portfolio beta of 1.5 and Advisor B averaged a 15% return with a portfolio beta of 1.2. If the T-bill rate was 5% and the market return during the per was 13%, which advisor was the better stock picker? O Advisor 8 was better because he achieved a good return with a lower beta Advisor Awas better because he generated a larger alpha Advisor A was better because he generated a higher return Advisor B was better because he generated a larger alpha

Two investment advisors are comparing performance Advisor A averaged a 17% return with a portfolio beta of 1.5 and Advisor B averaged a 15% return with a portfolio beta of 1.2. If the T-bill rate was 5% and the market return during the per was 13%, which advisor was the better stock picker? O Advisor 8 was better because he achieved a good return with a lower beta Advisor Awas better because he generated a larger alpha Advisor A was better because he generated a higher return Advisor B was better because he generated a larger alpha

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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Alex Smith and Jane Green are portfolio managers at your firm. Each manages a well-diversified portfolio. Your boss has asked for your opinion regarding their performance in the past year. Alex’s portfolio has a beta of 0.8 and had a return of 9.5%; Jane’s portfolio has a beta of 1.6 and had a return of 11.5%. Which manager had better performance? Why? (Assumer the risk-free rate is 4% and the market risk premium is 5%).
Stock Y has a beta of 1.4 and an expected return of 15.1 percent. Stock Z has a beta of .7 and an expected return of 8.6 percent. If the risk-free rate is 5 percent and the market risk premium is 6.5 percent, the reward-to-risk ratios for Stocks Y and Z are the SML reward-to-risk is percent, Stock Y is and 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.)
A manager's portfolio generated a return of 11.3% over the past year. The portfolio's beta was 1.16 and the return standard deviation was 15.7%. The market return was 9.8%, its return standard deviation was 13.4%, and the risk-free rate was 3.7%. What are the portfolio's Sharpe ratio, Treynor ratio, and Jensen's alpha?
All parts dont do handwritten
An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free rate is 5%, the expected return on the first factor (r₁) is 14%, and the expected return on the second factor (r2) is 8%. If bil 0.5 and bi2 = 0.8, what is Crisp's required return? Do not round intermediate calculations. Round your answer to one decimal place. % =
If an investor that owns a portfolio with 3 stocks increases their portfolio to 30 stocks, which of the following is MOST LIKELY to happen? Select one: a. risk will increase b. risk would decrease c. Systematic risk would increase d. return would increase
Question
You have been scouring PSE Edge looking for stocks that are “good values” and have calculated expected returns for five stocks. Assume that the risk-free rate is 7% and the market return is 9%. Which security would be the best investment? Choose the (1) expected return, and (2) beta of that best investment. (1) 8.01%; (2) 1.70 (1) 7.06%; (2) 0.00 (1) 4.04%; (2) -0.67 (1) 10.55%; (2) 2.50
You want to estimate the cost of equity of firm A using CAPM. Firm A has a beta of 1.3. Assume that the return on the market portfolio is 8.52%, and the risk-free rate is 3%. What is the cost of equity of firm A? Group of answer choices There is not enough information to answer this question. 10.17% 11.74% 14.21% 12.11%
Kindly solve it ASAP Two portfolio managers, Mr. P and Mr. Q, claim that they are both good at picking under-priced stocks. Over the years, the average return on the portfolio managed by Mr. P has been 17%, with standard deviation 15%, while the average return of Mr. Q's portfolio has been 18%, with standard deviation 17%. Over the same period, the average return on the market portfolio has been 15%, with standard deviation 12%. You estimate that the covariance between Mr. P's portfolio and the market has been sPM=0.0173, while the covariance between Mr. Q's portfolio and the market has been sQM=0.0202. Finally, you estimate that the average return on money market funds (a proxy for the risk-free rate of return) has been 5%. a. Compute the expected returns on Mr. P's and Mr. Q's portfolios that would be consistent with Market Model (ie: alpha equals zero under the Market Model). b. Given the Market as the benchmark, are either of the two managers over-performing the market?…
No excel please. Show formulas and step-by-step. Please answer fast i give you upvote.
If an investor that owns a portfolio with 3 stocks increases their portfolio to 30 stocks, which of the following is MOST LIKELY to happen? Select one: a. risk would increase b. the Sharpe ratio would increase c. return would decrease d. Sharpe would decrease

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