Q #1

(Capital asset pricing model) Using the CAPM, estimate the appropriate required rate of return for the three stocks listed here, given that the risk-free rate is 7 percent and the expected return for the market is 15 percent. STOCK BETA A 0.71 B 1.04 C 1.33 (Click on the icon located on the top-right corner of the data table above in order to copy its contents into a spreadsheet.) a. Using the CAPM, the required rate of return for stock A is |%. (Round to two decimal places.) b. Using the CAPM, the required rate of return for stock B is |%. (Round to two decimal places.) c. Using the CAPM, the required rate of return for stock C is %. (Round to two decimal places.)(Holdingperiod returns) From the price data in the popup window. , compute the holdingperiod returns for periods 2 through 4. a. The holdingperiod return in period 2 (from period 1 to period 2) for the stock is \"In. (Round to two decimal places.) b. The holdingperiod return in period 3 (from period 2 to period 3) for the stock is \"fa. (Round to two decimal places.) c. The holdingperiod return in period 4 (from period 3 to period 4) for the stock is \"In. (Round to two decimal places.) Data table (Click on the following icon :I in order to copyr its contents into a spreadsheet.) PERIOD STOCK PRICE 1 $7 14 2 3 13 4 17 .@ (Estimating beta) From the graph below relating the holding-period returns for Aram Inc. (in the Y-axis) to the S&P 500 Index (in the X-axis), estimate the firm's beta. Holding-period returns (%) 127 8- nc. (Y-Axis ) in - . . . Aram's beta is estimated to be about (Select the best choice below.) O A. +2.0 O B. + 1.0 O C. +0.5 O D. - 0.5 O E. - 1.0 OF. - 2.0(Expected rate of return and rtsk} Carter Inc. is evaluating a security. Calculate the investments expected return and its standard deviation. PROBABILITY RETURN :I 0.15 4% 0.40 ?% 0.30 11% 0.15 14% (Click on the icon located on the topright corner of the data table above in order to copy its contents into a spreadsheet.) a. The investment's expected rate of return is %. (Round to two decimal places) b. The investments standard deviation is :|%. (Round to two decimal places)