What is the beta of a stock where the expected rate of return is 14%, the market premium is 7%, and the risk free rate is 3%? a. 1.90 b. 0.95 C. 1.45 d. 1.57

Q: 3. Given that the CAPM holds, what is the lowest possible standard deviation for an investor who…

A: Standard deviation is the measure of risk and volatility and is measured as a deviation from the…

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A: Coefficient of Variation(CV) measures the risk per unit of return.Coefficient of Variation(CV)  =…

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Q: Portfolio Rp Op 12% 29% 1.25 Y 11 24 1.10 8 14 .75 Market 10 19 1.00 Risk-free 4 0 0

A: Sharpe Ratio= Expected Return-Risk free rate /Standard Deviation   Treynor Ratio= Portfolio…

Q: The risk-free rate is 3.2 percent. Stock A has a beta = 1.9 and Stock B has a beta = 1.3. Stock A…

A: A potential investment's beta is a measurement of the risk an investment will bring to a portfolio…

Q: a) Calculate the expected rate of return, FB, for stock B3 (FA= 14,30%) b) Calculate the standard…

A: Risk and return are essential financial principles. The term “risk” refers to the uncertainty and…

Q: Subject: Financial strategy & policy 8-5: BETA AND REQUIRED RATE OF RETURN A stock has a required…

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

Q: Q#10: Chapter 08: The index model has been estimated for stocks A and B with the following results:…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: LO 1 7. Calculating Returns and Standard Deviations Based on the following information, calculate…

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A: Stock with lowest coefficient of variance is mean variance dominant stock. coefficient of variance…

Q: A stock has a required return of 13%, the risk-free rate is 4.5%, and the market risk premium is 4%.…

A: In order to calculate the stock's beta, we can use the the formula given under capital asset pricing…

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: ar Find the CAPM beta of the following stock, where Rg is stock return, R Is market return, Rg Is…

A: The Capital Asset Pricing Model is a model that describes the relationship between the expected…

Q: Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free…

A: On Risk free portfolio:WA= Weight of Stock A.WA = SDB / SDA + SDB..= 55 / 45 + 55.= 0.55Thus, WB= 1-…

Q: A stock has an expected return of 12.6 percent and a beta of 1.17, and the expected return on the…

A: Expected return = Risk free rate + Beta *(Expected market return - Risk free rate).

Q: robability

A: Expected return can be defined as the return which is obtained by multiplying the potential outcome…

Q: forecast is correct, what is the abnormal return (alpha) relative to the CAPM E(r) for Stock: D?…

A: To determine the alpha, we first need to determine the CAPM return using the formula below: Expected…

Q: Suppose you observe the following situation: Security Pete Corporation Repete Company Beta 1.70 1.39…

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

Q: Beta 0.53 Risk-free 0.7% MRP 5.55% Rate Given the data in the table, what is the stock's risk…

A: Risk free rate = 0.7% Market return = 5.55% Beta = 0.53

Q: uestion 11 Using the single index model, what is the alpha of a stock with beta of 1.2, a market…

A: The alpha of the stock refers to the measure of the performance of the stock relative to the risk…

Q: Consider two stocks P & Q [3]     Expected Return (%) Standard Deviation (%) Stock P 16% 25%…

A: Stock P Stock Q Expected Return(E(r)) 16.00% 18.00% SD[r] 25.00% 30.00% The return on the…

Q: Suppose S = $96, K = $100, u = 1.03, d = 0.97, and R = 1.02. The risk-neutral probability, q, that…

A: In this question, we are required to determine the risk-neutral probability.

Q: Suppose we have two risky assets, Stock I and Stock J, and a risk-free asset. Stock I has an…

A: Given:

Q: Problem 8.13 (CAPM, Portfolio Risk, and Return) Consider the following information for stucks A, B,…

A: a.A mixture of different kinds of funds and securities for the investment is termed as the…

Q: Expected Return on the market HPR Beta Risk-free rate Stock ABC 15.68% 1.2 1% 6.68% What is the…

A: Alpha is the abnormal return which the investors get and is above the equilibrium or expected return…

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A: In the given case, we have provided the risk-free rate , probability of each state of economy and…

Q: None

A: To find the market risk premium and the expected rate of return on the market using the Capital…

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A: Expected return on Stock A (ErA) = 8%Expected return on Stock B (ErB) = 13%Standard deviation of…

Q: Consider the following Information: Portfolio ER SD Risk Free Market 6.00 13.2 A 11.2 a. Calculate…

A: Sharpe Ratio = (Return on portfolio - Risk-free rate) / SDCalculate the Sharpe ratios for the market…

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A: The expected rate of return of the stock based on the risk involved in the stock is given by the…

Q: The following are estimates for two stocks.. Stock Expected Return A B 0.16 0.24 Beta 0.77 1.33…

A: It is given that: Stock Proportion Expected rate Beta Firm specific Std dev A 0.32…

Q: Given the following information, determine the beta coefficient for Stock L that is consistent with…

A: Risk free rate 5.5% Market rate 10.5%