2. If a stock has a beta coefficient, equal to 1.20, the risk premium associated with...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
2. If a stock has a beta coefficient, equal to 1.20, the risk premium associated with the market is 9%, and the risk-free rate is 5%. Then what should be the appropriate return for this stock? (Write down the formulas that you use and show your calculations clearly). 3. An investor wants to calculate the expected return and standard deviation experience by his investment portfolio in the last three months. The historical returns are as follows: October-2022: 35% November-2022: 19% December-2022: 22% Assume that the probability of the first one to happen is 60% while the other two has equal probabilities to happen. Calculate the expected return and standard deviation (risk). (Write down the formulas you that you use and show your calculations clearly). 2. If a stock has a beta coefficient, equal to 1.20, the risk premium associated with the market is 9%, and the risk-free rate is 5%. Then what should be the appropriate return for this stock? (Write down the formulas that you use and show your calculations clearly). 3. An investor wants to calculate the expected return and standard deviation experience by his investment portfolio in the last three months. The historical returns are as follows: October-2022: 35% November-2022: 19% December-2022: 22% Assume that the probability of the first one to happen is 60% while the other two has equal probabilities to happen. Calculate the expected return and standard deviation (risk). (Write down the formulas you that you use and show your calculations clearly).
Expert Answer:
Answer rating: 100% (QA)
Based on the image you are presented with two separate questions related to finance and investment calculations Lets address each question one by one Question 2 Calculating the Expected Return of a St... View the full answer
Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
Posted Date:
Students also viewed these finance questions
-
1. The famous capital asset pricing model or CAPM is a single factor model that characterizes the portion of an assets total return that results from systematic movements in the broader market. It is...
-
1.Which of the following statements is CORRECT? a. The constant growth model is often appropriate for evaluating start-up companies that do not have a stable history of growth but are expected to...
-
Parisian Cosmetics Company is planning a one-month campaign for September to promote sales of one of its two cosmetics products. A total of $140,000 has been budgeted for advertising, contests,...
-
Suppose we implement the median of three routine as follows: Find the median of a[left], a[center], a[right], and swap it with a[right]. Proceed with the normal partitioning step starting i at left...
-
A sign is suspended from two chains AE and BF. Knowing that the tension in BF is 45 lb, determine (a) The moment about A of the force exerted by the chain at B, (b) The magnitude and sense of the...
-
Explain the purpose, use, and limitations of a derivative shareholder action.
-
I am going to focus on the customers of my business and leave cost-allocation issues to my accountant. Do you agree with this comment by a division president? Why?
-
A multinational corporation is accused of environmental pollution and human rights violations in a foreign country where it operates. What legal challenges arise in holding the corporation...
-
Bestseller Book's binding department has beginning inventory of 5,000 units and $20,000, consisting of $10,000 of direct materials and $10,000 of conversion costs. During the period, the department...
-
A firm cleans chemical tank cars in the Bay St. Louis area. With standard equipment, the firm typically cleaned 70 chemical tank cars per month. They utilized 10 gallons of solvent, and two employees...
-
Passage of the _______ in 1944 enabled nearly 8 million veterans to go to school.
-
Employment discrimination is most closely related to ______. a) specialization b) technology c) unemployment d) underemployment
-
Can you think of any decisions you have recently made that incurred opportunity costs?
-
In the presidential campaign of 1992, candidate Bill Clintons campaign coined the slogan Its the economy, stupid! Which 2012 presidential candidate might have benefited most by using the same slogan?...
-
The _______ century was termed The American Century.
-
Directions: Use the right-hand rule to determine the direction of the torque. Indicate or draw the direction in the diagrams or figures. 1. 6. 2. 7. 3. 8. 4. 9. -OF 5. 10. F.
-
A non-charmed baryon has strangeness S = 2 and electric charge Q = 0. What are the possible values of its isospin I and of its third component I z ? What is it usually called if I = 1/2?
-
1. What is the expected return and standard deviation of a portfolio consisting of $2,500 invested in a risk-free asset with an 8-percent rate of return, and $7,500 invested in a risky security with...
-
Fill in the missing information in the followingtable: Common Shares in Canada Required return 15% 3% Dividend Current Dividend Company Price growth dividend expected in 1 year $4.50 $5.00 $600 $70...
-
A firm has the following balance sheet items: The before-tax interest cost on new 15-year debt would be 7.5 percent, and each $1,000 bond would net the firm $975 after issuing costs. Common shares...
-
Explain how the control variate technique is implemented.
-
Suppose that in September 2013 a company takes a long position in a contract on May 2014 crude oil futures. It closes out its position in March 2014. The futures price (per barrel) is \($88.30\) when...
-
A U.S. Treasury bond pays a 7% coupon on January 7 and July 7. How much interest accrues per \($100\) of principal to the bond holder between July 7, 2013, and August 9, 2013? How would your answer...
Study smarter with the SolutionInn App