You have observed the following returns over time: Year          Stock X           Stock Y           Market 2015          14%                 13%                 12% 2016          19                    7                      10        2017          −16                  −5                    −12 2018          3                      1                      1 2019          20                    11                    15        Assume that the risk-free rate is 6% and the market risk premium is 5%. What are the betas of Stocks X and Y?

Q: Answer the following by using mathematical calculations: a) Calculate the expected rate of return…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

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

A: Covariance measures the directional relationship between the returns of 2 securities.The positive…

Q: stock has a required return of 8%, the risk-free rate is 3.5%, and the market risk premium is 3%. a.…

A: CAPM is an abbreviation used for Capital asset pricing model. This model is used to determine the…

Q: You are given the returns for the following three stocks: Stock B Stock C 3% -23% 9 37 8 11 4 11…

A: Arithmetic return refers to the method used for calculating the mean or average of the various…

Q: How to start this question? g) Use the following two stocks. Scenario Probability Stock A Stock B…

A: Stock A:    Stock B:

Q: 1.25

A: Please note that as per Bartleby answering guidelines, we are allowed to answer only first 3…

Q: What are the expected returns for stocks Y and Z under the conditions shown below?   A0 0.04…

A: Calculation of Expected Return for Stock Y:

Q: Consider the following information: Rate of Return if State Occurs Probability of State of Economy…

A: Given:

Q: Can you tell from the data below which stock's return has the highest correlation with the return of…

A: To Find: which stock's return has the highest correlation

Q: 1. Stock B has a beta of 1.2 and a return of 13.1%. Stock D has a beta of 0.8 and a return of 11.0%.…

A: The CAPM model will be used here. CAPM stands for Capital Asset Pricing Model. As per the CAPM model…

Q: A stock has a required return of 7%, the risk-free rate is 2.5%, and the market risk premium is 3%.…

A: Required rate of return as per CAPM  :— Expected Return = Rf + (Rm - Rf) beta of the…

Q: A stock has an expected return of 17 percent, its beta is 1.35, and the risk-free rate is 4 percent.…

A: CAPM is capital asset pricing model to compute the cost of equity based on company risk index as…

Q: A stock has a beta of 1.61, the expected return on the market is 0.07, and the risk-free rate is…

A: Return on stock :— It is the rate of return expected by the investors of stock.    According to CAPM…

Q: Give typing answer with explanation and conclusion  Assume that the risk-free rate is 2.5% and the…

A: Step 1 The financial requirements of an investment, development or significant purchase are outlined…

Q: Stocks A and B have the following probability distributions of expected future returns: Probability…

A: The anticipated value of the percentage of yield that an investor may gain under a given economic…

Q: Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal…

A: The standard deviation quantifies the level of risk associated with a stock, while the mean…

Q: Complete the table with the alphas below: (Round to one decimal place.) Expected Return Volatility…

A: According to CAPM approach, k = Rf + beta (Rm - Rf) Where , k = rate of return Rm =  market return…

Q: Using the following information: MARKET STOCK Z 2018 2.4580 1.9854 CALCULATE: Beta (slope) Alpha…

A: The return on the stock is calculated by adding all dividends received and capital gains realized,…

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

A: Stock A:Beta = 1.1R-square = 0.29Stock B:Beta = 1.2R-square = 0.14σM = 29%

Q: A stock has a beta of 0.73, the expected return on the market is 0.08, and the risk-free rate is…

A: To calculate the expected return on the stock by using the capital of surprising model we use the…

Q: Consider the following information: Rate of Return if State Occurs State of Economy Probability of…

A: Probability recession = p1 = 0.17Probability normal = p2 = 0.62Probability boom = p3 = 0.21Stock A…

Q: places. If the market risk premium increased to 9%, what would happen to the stock's required rate…

A: According to CAPM Required rate =Risk free rate +Beta x market risk premium

Q: Which portfolio of A and B has: (a) An expected return of 10% (b) An expected return of 7.5% (c) A…

A: We can determine the expected return of portfolio using the formula below:Weight of A + Weight B =…

Q: Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal…

A: Mean is the average value of a set of numbers, obtained by summing up all the values and dividing it…

Q: answer each part correctly PLEASE.

A: Capital asset pricing model (CAPM) is a tool used to measure the expected return on an investment.…

Q: None

A: a. Calculate the arithmetic average return on these stocks over the sample period.ABC: Arithmetic…

Q: Which one of the following stocks is correctly priced if the risk-free rate of return is 3.0 percent…

A: In this question, we are required to determine the stock which is correctly priced.

Q: ssume that the CAPM is a good description of stock price returns. The market expected return is 7%…

A: Alpha shows the risk adjusted perfomance of the portfolio it is measured as the how much is the rate…

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

A: ParticularsStock AStock BBeta1.201.5R-square0.250.15σM16%

Q: State Recession Probability 15.00% Normal 70.00% Boom 15.00% Market risk premium 7.00% Stock I 5.00%…

A:

Q: From Previous Question G): >>>What is the beta? Explain with its formula. g) Use the…

A: Calculation of Expected Return, Standard Deviation and Covariance: Excel Spreadsheet:

Q: Suppose that the Tbill rate is 3% and the expected return on the market is 9.5%. Consider the…

A: Alpha is the difference between the actual return of the portfolio and the expected risk adjusted…

Q: You have been looking for stocks that are "good values" and have calculated expected returns for…

A: The minimum return that the investor expects to receive from the investment is referred to as the…

Q: Consider the following information: Stock Return if Market Return Is: Stock 12 Stock A B C D e -12 E…

A: Beta refers to the concept used for measurement of the volatility or risk which is systematic in…

Q: A stock has an expected return of 0.15, its beta is 0.52, and the expected return on the market is…

A: Expected return = 0.15 Beta = 0.52 Market return = 0.08

Q: 3. Assume that the market is in equilibrium and that stock betas can be estimated with historical…

A: Variables in the question:Let us denote return on United Fund (UF) =XLet us denote return on…

Q: sume that the CAPM is a good description of stock price returns. The market expected return is 8%…

A: Expected market return = 8%Risk free rate = 3.5%Beta Green Leaf = 1.50Beta NatSam = 1.80Beta HanBel…

Q: Ο A stock has a required return of 16%, the risk-free rate is 5.5%, and the market risk premium is…

A: To calculate the stock's beta and then determine the effect of an increase in the market risk…

Q: A stock has a beta of 1.08, the expected return on the market is 0.09, and the risk-free rate is…

A: Here, Beta = 1.08 Expected return on the market = 0.09 Risk-free rate = 0.06 To Find: Expected…

Q: Assume that the CAPM is a good description of stock price returns. The market expected return is 7%…

A: To calculate the alpha of each stock, use the Capital Asset Pricing Model (CAPM). The formula for…

Q: he market and Stock J have the following probability distributions: Probability rM rJ 0.3…

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

Q: Considering these data where 'P1' estimates are analyst forecasts of future stock prices: Stock PO A…

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

Q: You are given the following information concerning a stock and the market:   Returns Year Market…

A: YearMarket returnStock return201410%25%201512%28%201613%4%2017-14%-22%201837%16%201915%23%

Q: Consider the following multifactor (APT) model of security returns for a particular stock. Factor…

A: Expected return = RF+B1*(R1-RF)+B2*(R2-RF)+B3*(R3-RF)RF= Risk Free Rate(R-RF) =Risk Premium.B = Beta