You hold the positions in the table below. Portfolio Beta Required return Price $48.00 29.00 76.00 33.00 % Shares 175 179 155 309 Amazon.com Family Dollar Stores McKesson Corporation Schering-Plough Corporation. What is the beta of your portfolio? If you expect the market to earn 14.60 percent and the risk-free rate is 4.20 percent, what is the required return of the portfolio? Note: Do not round intermediate calculations and round your final answers to 2 decimal places. Beta 4.06 2.20 0.62 1.22

You hold the positions in the table below. Portfolio Beta Required return Price $48.00 29.00 76.00 33.00 % Shares 175 179 155 309 Amazon.com Family Dollar Stores McKesson Corporation Schering-Plough Corporation. What is the beta of your portfolio? If you expect the market to earn 14.60 percent and the risk-free rate is 4.20 percent, what is the required return of the portfolio? Note: Do not round intermediate calculations and round your final answers to 2 decimal places. Beta 4.06 2.20 0.62 1.22

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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You expect the risk-free rate to be 4 percent and the market return to be 10 percent. You also have the following information about three stocks. Current Expected Expected Stock Beta Price Price Dividend U 1.5 $10 $11.50 $1.00 N 1.1 $27 $30 $0.00 Ο 0.8 $35 $36 $1.50 (Question 2 of 2) What is the required rate of return (based on the CAPM) for an equally weighted portfolio of the three stocks? (Enter your answer as a percentage, i.e., "10.25" for 10.25 percent
Fiske Roofing Supplies' stock has a beta of 1.23, its required return is 9.00%, and the risk-free rate is 4.30%. What is the required rate of return on the market? (Hint: First find the market risk premium.) Select the correct answer. a. 8.12% b. 7.85% c. 7.94% d. 8.03% e. 8.21%
Quantitative Problem: You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta A $300,000 1.2 B 200,000 1.6 C 400,000 0.75 D 100,000 -0.35 Total investment $1,000,000 The market's required return is 11% and the risk-free rate is 4%. What is the portfolio's required return? Do not round intermediate calculations. Round your answer to three decimal places.
Suppose that the borrowing rate that your client faces is 8% Assume that the equity market index has an expected return of 12% and standard deviation of 28%, that ry - What is the range of risk aversion for which a client will neither borrow nor lend, that is, for which y-1? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. y=1 for SAS
A financial analyst for the ZZZ Corporation uses the Security Market line to estimate the cost of equity, Re. The analyst observes the current risk-free interest rate, Rf, is 3%. The analyst estimates that ZZ has a beta of 2. If the analyst finds that RE is 13%, what does the analyst use as the value of [E(RM) – R¡]? -
We have the following information on Stocks A and B. The risk-free rate is 5%, and the market risk premium is 7.5%. Assume that the market portfolio is correctly priced. Based on the reward-to-risk ratio, are Stocks A and B overpriced, underpriced, or correctly priced? Stock A Stock B Expected return 1196 16.25% Beta 0.8 1.5
Quantitative Problem: You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta A $250,000 1.20 B 200,000 1.60 C 400,000 0.80 D 150,000 -0.35 Total investment $1,000,000 The market's required return is 9% and the risk-free rate is 3%. What is the portfolio's required return? Do not round intermediate calculations. Round your answer to three decimal places.
Use the expected return-beta equation from the CAPM. What is the expected return for a stock if the risk-free rate is 4%, beta 0.9 and the expected return for the market portfolio is 6%? What is the risk-free rate if beta is 1.1, the expected return 6.3% and the expected return for the market portfolio is 6%? What is beta if the risk-free rate is 4%, the expected return 11% and the expected return for the market is 6%? What is the expected return for the market if the risk-free rate is 4%, beta 0.9 and the expected return 11%?
Consider a two-state outcome for the following problem: Winterhold Publishing House Current Stock Price $25.00 Exercise Price $27.00 Risk-free Rate 0.05 Share Price, High $30.00 Share Price, Low $20.00 Required: Using the data above, please find the hedge ratio. You currently own several shares of this company. The purchase puts according to the Hedge ratio to construct a non-random portfolio. Show the payoff for both outcomes, then solve for present value and the price of the put.
Using the CAPM, estimate the appropriate required rate of return for the three stocks listed here, given that the risk-free rate is 4 percent and the expected return for the market is 17 percent. STOCK BETA A 0.63 B 0.95 C 1.48 a. Using the CAPM, the required rate of return for stock A is B.Using the CAPM, the required rate of return for stock b is C.Using the CAPM, the required rate of return for stock C is (Round to two decimal places.)
Stock A's stock has a beta of 1.30, and its required return is 13.75%. Stock B's beta is 0.80. If the risk-free rate is 2.75%, what is the required rate of return on B's stock? Do not round your intermediate calculations.
Quantitative Problem: You are holding a portfolo with the following investments and betas: Stock Dollar investment Beta A $300,000 1.30 B 200,000 1.70 300,000 0.80 D. 200,000 -0.20 Total investment $1,000,000 The market's required return is 9% and the risk-free rate is 3%. What is the portfolio's required return? Do not round intermediate calculations. Round your answer to three decimal places.

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