The following table shows estimates of the risk of two well-known Canadian stocks: a. What proportion of

Question:

The following table shows estimates of the risk of two well-known Canadian stocks:

a. What proportion of each stockâ€™s risk was market risk, and what proportion was specific risk?
b. What is the variance of Toronto Dominion? What is the specific variance?
c. What is the confidence interval on Canadian Pacificâ€™s beta?
d. If the CAPM is correct, what is the expected return on Toronto Dominion? Assume a risk-free interest rate of 5% and an expected market return of 12%.
e. Suppose that next year the market provides a zero return. Knowing this, what return would you expect from TorontoDominion?

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...