Assume that both portfolios A and B are well diversified, that E( rA) = .12, and E( rB) = .09. If the economy has only one factor, and ßA = 1.2 whereas ßB = .8, what must the risk- free rate be?
Answer to relevant QuestionsDerive a more general (than the numerical example in the chapter) demonstration of the APT security market line a. For a single- factor market b. For a multifactor market Examine the figure85 that follows, which presents cumulative abnormal returns both before and after dates on which insiders buy or sell shares in their firms. How do you interpret it? What are we to make of the pattern of ...Match each example to one of the behavioural characteristics. The following are the current coupon yields to maturity and spot rates of interest for six Canada bonds. Assume all securities pay interest annually. Compute, under the expectations theory, the two- year implied forward rate ...Janet Ludlow is preparing a report on U. S. manufacturers in the electric toothbrush industry, and has gathered the information shown in Tables 15B and 15C. Ludlow’s report concludes that the electric toothbrush industry ...
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