# Question: Compute the abnormal rates of return for the following stocks

Compute the abnormal rates of return for the following stocks during period t (ignore differential systematic risk):

Rit = return for stock i during period t

Rmt = return for the aggregate market during periodt

Rit = return for stock i during period t

Rmt = return for the aggregate market during periodt

## Answer to relevant Questions

Compute the abnormal rates of return for the five stocks in Problem 1 assuming the following systematic risk measures (betas): Stock βiB ......... 0.95F ......... 1.25T ......... 1.45C ......... 0.70E ...What is the relationship between covariance and the correlation coefficient?Draw a hypothetical graph of an efficient frontier of U.S. common stocks. On the same graph, draw an efficient frontier assuming the inclusion of U.S. bonds as well. Finally, on the same graph, draw an efficient frontier ...The following are monthly percentage price changes for four market indexes.Compute the following.a. Average monthly rate of return for each indexb. Standard deviation for each indexc. Covariance between the rates of return ...You have been offered an opportunity to invest in one of the two fully diversified portfolios, Portfolio H and Portfolio L. While you know that the betas of these portfolios are identical, you only know that, on average, the ...Post your question