Are the following propositions true, false, or uncertain? For each statement, first state whether it is...
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Are the following propositions true, false, or uncertain? For each statement, first state whether it is true/false/uncertain, then explain your reasoning. You will be assessed on the quality of your explanation. (i) Tesla reported a profit of $270 million for 2020. At the same time, its share price rose by more than 700% in the same year. The fact that the stock market reacted positively to news of positive earnings suggests that it must be informationally efficient. (3 marks) (ii) In a CAPM world, a long put written on a positive beta stock has an expected return that is below the risk-free rate. (4 marks) (iii) Consider two stocks, X and Y, both with identical positive betas. In a CAPM world, a portfolio that is long and short equal dollar amounts in X and Y will have zero systematic risk and hence an expected return equal to the risk-free rate. (5 marks) Are the following propositions true, false, or uncertain? For each statement, first state whether it is true/false/uncertain, then explain your reasoning. You will be assessed on the quality of your explanation. (i) Tesla reported a profit of $270 million for 2020. At the same time, its share price rose by more than 700% in the same year. The fact that the stock market reacted positively to news of positive earnings suggests that it must be informationally efficient. (3 marks) (ii) In a CAPM world, a long put written on a positive beta stock has an expected return that is below the risk-free rate. (4 marks) (iii) Consider two stocks, X and Y, both with identical positive betas. In a CAPM world, a portfolio that is long and short equal dollar amounts in X and Y will have zero systematic risk and hence an expected return equal to the risk-free rate. (5 marks) Are the following propositions true, false, or uncertain? For each statement, first state whether it is true/false/uncertain, then explain your reasoning. You will be assessed on the quality of your explanation. (i) Tesla reported a profit of $270 million for 2020. At the same time, its share price rose by more than 700% in the same year. The fact that the stock market reacted positively to news of positive earnings suggests that it must be informationally efficient. (3 marks) (ii) In a CAPM world, a long put written on a positive beta stock has an expected return that is below the risk-free rate. (4 marks) (iii) Consider two stocks, X and Y, both with identical positive betas. In a CAPM world, a portfolio that is long and short equal dollar amounts in X and Y will have zero systematic risk and hence an expected return equal to the risk-free rate. (5 marks) Are the following propositions true, false, or uncertain? For each statement, first state whether it is true/false/uncertain, then explain your reasoning. You will be assessed on the quality of your explanation. (i) Tesla reported a profit of $270 million for 2020. At the same time, its share price rose by more than 700% in the same year. The fact that the stock market reacted positively to news of positive earnings suggests that it must be informationally efficient. (3 marks) (ii) In a CAPM world, a long put written on a positive beta stock has an expected return that is below the risk-free rate. (4 marks) (iii) Consider two stocks, X and Y, both with identical positive betas. In a CAPM world, a portfolio that is long and short equal dollar amounts in X and Y will have zero systematic risk and hence an expected return equal to the risk-free rate. (5 marks)
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Sure lets break down each statement 1 Tesla reported a profit of 270 million for 2020 At the same time its share price rose by more than 700 in the sa... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
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