# Question

Using the formulas in Appendix 17B, compute a least squares regression equation for problem 12. (Round beta and alpha to two places after the decimal point.)

## Answer to relevant Questions

Use the beta (bi) from problem 13, and plug it into the formula for the security market line (Formula 17–7). Assume the risk-free rate (RF) is 7 percent and the market rate of return (KM) is 12.6 percent. What is the value ...Assume the following risk-return possibilities for 10 different portfolios. Plot the points in a manner similar to Figure 17–3 and indicate the approximate shape of the efficient frontier. Is the locked-in reinvestment assumption valid for zero-coupon bonds if they are sold before maturity? Explain. Use Figure 18-2 and the modified duration for the securities given to answer the following questions. a. Compute the expected change in price for the 30-year Treasury if interest rates go up by 75 basis points. Assuming the ...Assume you buy a 20-year, $1,000 par value zero-coupon bond that provides a 10 percent yield. Almost immediately after you buy the bond, yields go down to 8 percent. a. What will be your gain on the investment? b. What will ...Post your question

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