The beta for a certain stock is 1.15, the risk-free rate is 5 percent, and the expected

Question:

The beta for a certain stock is 1.15, the risk-free rate is 5 percent, and the expected return on the market is 13 percent. Complete the following table to decompose the stock€™s return into the systematic return and the unsystematic return.

Unexpected Returns Systematic Actual Returns Unsystematic Portion (e) Portion RM [RM- E(R,)] × B [R - E(R)] – [RM- E(

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals of Investments, Valuation and Management

ISBN: 978-1259720697

8th edition

Authors: Bradford Jordan, Thomas Miller, Steve Dolvin

See More Books

Question Posted: Nov 15, 2018 06:54 AM

See More Questions

Alison is an interior designer with her own business. She does not have an office as she thinks it would just be a waste of money as her clients do not come to her, but she goes to the clients. It is...
The expected inflation rate is 5 percent and the actual inflation rate is 7 percent. According to Friedman, is the economy in long-term equilibrium? Explain your answer.
Complete the following table to indicate what effect an increase in each of the consumption components will have on consumption. Complete the blank area answer increase or decrease. An increase will...
General-equilibrium effects with labor complementarity. Consider an economy comprised of 100 cities. Each city initially contains 1 million each of high school dropouts, high school graduates,...
Why aren't heavier elements much larger than lighter elements?
Suppose square ABCD with side length 8 in. is cut from paper. Another square, EFGH, is placed with its corners at the midpoints of ABCD, as shown. A third square is placed with its corners at...
Outline how standard desktop applications such as a spreadsheet or database can be used to set up a basic T&D system.
A partial work sheet for Jim Jacobs' Furniture Repair is shown as follows. Indicate by letters (a) through (d) the four adjustments in the Adjustments columns of the work sheet, properly matching...
So I'm new to arduino, and I am working on a project for school and I was wondering if I am correct in my wiring and coding. The premise of the project is an automatic pet feeder. Basically, a pet...
Based on the data in Exercise 4-26, journalize the closing entries for Alert Security Services Co. Exercise 4-26 Alert Security Services Co. offers security services to business clients. Complete the...
What is the price of a Treasury STRIPS with a face value of $100 that matures in 10 years and has a yield to maturity of 3.5 percent?
Consider the following information on Stocks I and II: The market risk premium is 8 percent and the risk-free rate is 5 percent. Which stock has the most systematic risk? Which one has the most...
The unit cell of a high-temperature superconductor is shown here. What is its formula? Y Ba Cu
Providers are responsible for submitting accurate claims. Claims need to follow state and federal laws. Providers must follow guidelines to be reimbursed for the services that they provide. Providers...
As a healthcare leader, the health information administrator is responsible for communicating compliance requirements and regulations both internally (providers) and externally (patients). This...
Marina is the coordinator of a small community centre. Among the programs the centre provides are limited recreation services for retired people. The people who attend these have indicated that they...
The Regulatory Action Report is an important document filled with information and is available to the public. As a taxpayer, and as a healthcare professional, what is the purpose of having this...
Chin and Hamdan work in GG Electronics Company located in Northern Malaysia. Both of them found that there are many unjust issues that occur in the management, especially those involving the welfare...
1. How does Apple use strategic management to compete? 2. What is leaderships role in Apples strategic implementation? 3. What are key forces in the general and industry environments that affect...
Controls can be identified based on their function. The functions are preventive, detective, and corrective. A. True B. False
You agree with J. P. Morgan that the stock market will fluctuate and have become concerned with how these fluctuations might affect your stock portfolio. Having read about the VaR method for...
The primary difference between the Sharpe ratio and the Sortino ratio is that the Sortino ratio considers: a. Total volatility. b. Only systematic risk. c. Only upside volatility. d. Only downside...
Suppose you have the following expected return and risk information for stocks and bonds that will be used to form a Sharpe-optimal portfolio. E(R) = .12 os = .15 E(R) = .06 .10 .10 .04 OB Corr (Rs....
Let's assume your lab balloons, when filled with air, each had a mass of 3.00 grams. In a variation of your lab activity, you attach one of these balloons to a string such that the distance from the...
Samantha normally requires 1 3 7 0 0 kJ ( about 3 2 7 4 Calories ) of food energy per day. If Samantha consumes 1 4 3 8 5 kJ per day, she will steadily gain weight. How much time must Samantha spend...
Five resistors with known resistances R = 5.00 2, R2 = 5.00 2, R3 = 3.00 Q2, R4 = 5.00 Q, and R5 = 5.00 Q are connected to a battery with emf = 7.00 V as shown in the figure. Please answer in Sl...

The beta for a certain stock is 1.15, the risk-free rate is 5 percent, and the expected

Question:

Unexpected Returns Systematic Actual Returns Unsystematic Portion (e) Portion RM [RM- E(R,)] × B [R - E(R)] – [RM- E(R„)] × ß Year R- E(R) RM- E(R„) м 12 2012 11 8. 2013 2014 -8 -11 14 2015 -6 2016 28

Step by Step Answer:

ER 05 11513 05 1420 Unexpected Returns Systematic ...View the full answer

Fundamentals of Investments, Valuation and Management

Students also viewed these Business questions