Question: 12. Decompose the Total Return on the systematic and unsystematic portions of the following asset: Expected Return market = 4% Risk Free - 1% Expected

12. Decompose the Total Return on the systematic and unsystematic portions of the following asset: Expected Return market = 4% Risk Free - 1% Expected Return asset A-7% Actual Return Market = 2% Beta asset A .89 Actual Return asset A 5 % UNE (RM) = RM-E(R) UNE (RA) = RA-E(R) Systematic Portion of UNE Return = (Ry - ERBA Unsystematic Portion of UNE Return = (RA-E(R)) - (RM-E(R))BA Interpret your results

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 Finance Questions!

A tornado damaged a part of the City of Westbrook's Police Station. Some of the costs related to the damage included the following: 1. The building wiring had to be replaced. Since the wiring was...

1. Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. Company $1 Discount Store Everything $5 Forecast return 12% 11% Standard deviation of returns 8% 10% Beta...

Question 4 2 pts You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. One stock has a beta of 1.15. What does the beta of the second stock have to be if...

According to the capital asset pricing model, the expected return on a risky asset depends on three components. Which of the following describes each component and its role determining expected...

QUESTION 1 . The table below provides forecasts of possible returns of a stock of KdB PLC during the coming year. The forecasts are based on five equally - likely possible state of the economy. A...

Assignment # 2 FINA 4466 Investments Fall 2020 Due Date: Nov 19, 2020. by 5 pm. Use Excel to conduct your analysis and plot figures. Copy and paste any generated tables or figures in a word document...

Answer the 11 questions for the attached valuation project.Provide high level analysis and support by excel calculations. Please suggest a reasonable price. Thank you Provide high level analysis and...

Portfolio return and beta Personal Finance Problem Jamie Peters invested $116,000 to set up the following portfolio one year ago a. Calculate the portfolio beta on the basis of the original cost...

QUESTION 1 . The table below provides forecasts of possible returns of a stock of KdB PLC during the coming year. The forecasts are based on five equally - likely possible state of the economy. A...

11. One year from today, a stock is expected to pay a dividend of $8 and then to sell at a price of $109. The risk-free interest rate is 4%, the expected market return is 12% and the stock has a beta...

Compared to variance, the more accurate (and widely accepted) measure of risk in the stock market is _________ A) standard deviation. B) Sharpe ratio. C) variance. D) alpha. CAG is a large food...

Question 1. [10] Let A be an additively written abelian group. Consider the endomorphism group of A End A := {a : A A la is an endomorphism}. Let us define + and on End A as follows : For a, B E End...

Interpret the following factor analysis results. The variables represent sample results of self-reported emotions while viewing a film. Why are only two factors reported below? What would you name...

list and explain the two classes of net assest for provate, not for profit colleges and universities

In the Goblette Manufacturing Company, indirect labor is budgeted for $108,000 and factory supervision is budgeted for $36,000 at normal capacity of 160,000 direct labor hours. If 180,000 direct...