Question: 1. The CAPM includes several elements including the risk free rate, the market risk premium, which is the current required rate of return on an

1. The CAPM includes several elements including the risk free rate, the market risk premium, which is the current required rate of return on an average portfolio of stocks less the risk free rate, and a beta coefficient, which measures the relative risk of a stock to the overall systematic or market risk of an average portfolio of stocks. If ABC Company stock has a beta coefficient of 2.0 then we conclude it is twice as risky as the overall market.

a. True

b. False

2. What is the expected return of the following $100,000 portfolio of stock vestments?

Stock Amount Return

ABC $ 30,000 6.0%

BOBO 25,000 15.0%

STASH 45,000 20.0%

$100,000

a. 41.00%

b. 14.55%

c. 13.67%

d. None of the above

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

As of September 4, 2016, the film Suicide Squad had an average rating of 3.7 out of 5 based on 117,323 viewer ratings (Rotten Tomatoes website). How are the viewer ratings of Suicide Squad related to...

Question 3 3 pts The CAPM includes several elements including the risk free rate, the market risk premium (which is the current required rate of return on an average portfolio of stocks less the risk...

The CAPM includes several elements including the risk free rate, the market risk premium (which is the current required rate of return on an average portfolio of stocks less the risk free rate), and...

dent Engagement ter (Student) arse Question- Question 3 3 pts eTexts (Unizin En- e) The CAPM includes several elements including the risk free rate, the market risk premium, which is the current...

please type out the answer. thank you! ONLY ANswer #5 5. Index model, tracking portfolio: You determine that the beta of Costco (COST) is 0.7. You also determine that E[rosh-5.5% and Ogos,-19%. You...

I need my powerpoint draft edited to ensure all the requirement of the assignment are answered and clearly noted in this powerpoint. I have attached the current Powerepoint draft, the...

Please see the snap photo below for further instructions. thank you 1. Read the Electrolux and GE Applianceh 2. \"the Excel spreadsheet template prov1 e posted N 3 Answer the following questions....

Please see the snap photo below for further instructions. thank you and be safe Exhibit 7. Valuation of GE Appliances Using DCF Analysis (millions of US dollars) GE Appliances Actual Actual*...

Given the following information on a bond, Par value: $1000 Interest rate: 6% Coupon rate: 8% paid semiannually Years to maturity: 15 years, what is the expected price at the end of year 5? Select...

lets start with some definitions. Discourse, according to your textbook, means language in action or language for the purpose of doing something. A discourse community is a group of people bound...

Could you help me build an essay summarizing the factors that are expected to impact Rite Aid's, a pharmaceutical retail industry's, financial position in the next three years? Such factors include...

An independent CPA is conducting an audit of an entity that receives federal financial assistance and is subject to the GAO standards ( GAGAS ) . The auditor must design the audit to provide...

Case Greenbuilders Pte Lid ("GPL") is a local construction company which specialises in providing bespoke Design and Build construction services for private residential homes that are designed to be...