Consider the following information: Portfolio Expected Return Beta Risk-free 6% 0 Market 10.8 1.0 A 8.8 1.7

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

Question:

Consider the following information:

Portfolio	Expected Return	Beta
Risk-free	6%	0
Market	10.8	1.0
A	8.8	1.7

Required:

a. Calculate the return predicted by CAPM for a portfolio with a beta of 1.7

b. What is the alpha of portfolio A

c. If the simple CAPM is valid, is the situation above possible?

multiple choice

Yes

Related Book For answer-question

Precalculus

ISBN: 978-0321716835

9th edition

Authors: Michael Sullivan

See More Books

Posted Date: May 03, 2023 02:48 AM

See More Questions

The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
What volume of 0.2 M AGNO3 is required to react exactly with 120.0 mL of 0.3 M Na SO4 solution? Hint: You will want to write a balanced reaction. 180mL 90mL O345 ml 360mL O 36mL
Consider the following information for Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation...
Prepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data. A. depreciation on buildings and equipment, $17,500...
Pulverized coal pellets, which may be approximated as carbon spheres of radius r o = 1 mm, are burned in a pure oxygen atmosphere at 1450 K and 1 atm. Oxygen is transferred to the particle surface by...
Assume that the multiple correlation between a criterion measure and several predictors is .48. How would you interpret that?
Which class of stockholders takes the greater investment risk? a. Common b. Preferred c. Neither; bondholders take the most risk d. Both preferred and common take equal risk
Firms A and B are roughly the same size, but operate in different industries. Firm A bases a high proportion of its executive compensation on net income and a relatively low pro-portion on share...
Answer: r'(1) = Let r(x) = f(g(h(x))), where h(1) = 6, 9(6) = 3, h'(1) = 9, g'(6) = -2, and f'(3) = 5. Find r'(1). Submit answer A
In Intuit QuickBooks how do I record this transaction?... Wrote check number 10010 to City Credit Union for payment of amount due (City Credit Union in the Account/Category field); $110.35.
Santos Co. is preparing a cash budget for February. The company has $13,000 cash at the beginning of February and anticipates $68,000 in cash receipts and $118,000 in cash payments during February....
x 2 = 5 x ( x + 3 6 0 ) Factored
Explain the process and tasks to apply, interview, and follow up for a job most effectively Identify common employment messages and explain when you would use each one First, share at least four...
The carrying case would be sold to the end consumer for $ 4 9 . 9 9 . Lisa will not sell directly to the consumer but will use a wholesaler who will sell to a retailer ( e . g . , university...
The president of Eaglesway Incorporated attended a seminar about the contribution margin model and returned to her company full of enthusiasm about it. She requested that last year's traditional...
Summative assessment focuses on learning completed . It gives you, the learner, the opportunity to demonstrate to yourself and your professor how far you have moved towards achieving an understanding...
Give the IP address subnetting for given topology for each PC, router and switch so that each PC can ping to router and back. Also mention the commands to be used in cisco packet tracer to configure...
(a) What is the focal length of a magnifying glass that gives an angular magnification of 8.0 when the image is at infinity? (b) How far must the object be from the lens?
In problem, evaluate each expression. Do not use a calculator. log 2 2 3
In problem, solve each equation. 2 10 2-x = 5
In problem, solve each equation. e 3x = e 2-x
A wheel of radius $r$ rolls on a flat surface without slipping. Determine the angular motion of the wheel in terms of the linear motion of its center $O$. Also determine the acceleration of a...
The right-angle bar rotates clockwise with an angular velocity which is decreasing at the rate of $4 \mathrm{rad} / \mathrm{s}^{2}$. Write the vector expressions for the velocity and acceleration...
The load $L$ is being hoisted by the pulley-and-cable arrangement shown. Each cable is wrapped securely around its respective pulley so it does not slip. The two pulleys to which $L$ is attached...

Consider the following information: Portfolio Expected Return Beta Risk-free 6% 0 Market 10.8 1.0 A 8.8 1.7

Question:

Expert Answer:

a To calculate the return predicted by CAPM for a portfolio with a beta of 17 we can use the CAPM fo... View the full answer

Precalculus

Students also viewed these finance questions