Question
In: Finance
Consider the following table, which gives a security analyst's expected return on two stocks for two...
|
Consider the following table, which gives a security analyst's expected return on two stocks for two particular market returns: |
| Market Return | Aggressive Stock | Defensive Stock | |||||||||
| 6.76 | % | 3.76 | % | 2.01 | % | ||||||
| 21.26 | 30.51 | 13.76 | |||||||||
| Required: | |
| (a) | What are the betas of the two stocks? (Round your answers to 2 decimal places.) |
| Beta A | |
| Beta D | |
| (b) |
What is the expected rate of return on each stock if the market return is equally likely to be 6.76% or 21.26%? (Round your answers to 2 decimal places. Omit the "%" sign in your response.) |
| Rate of return on A | % |
| Rate of return on D | % |
| (c) |
What is the expected rate of return for the market, if the T-bill rate is 9.76%, and the market return is equally likely to be 6.76% or 21.26%? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
| Expected rate of return | % |
Solutions
jeff jeffy answered 8 months agoRelated Solutions
Consider the following table, which gives a security analyst's expected return on two stocks In two particular scenarios for the rate of return on the market:
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Consider the following table, which gives a security analyst’s
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rate of return on the market:
Market Return
Aggressive Stock
Defensive Stock
5
%
–3
%
4
%
24
36
9
a. What are the betas of the two stocks?
(Do not round intermediate calculations. Round your answers
to 2 decimal places.)
Agressive stock:
Defensive stock
b. What is the expected rate of return on each
stock if the two...
Consider the following table, which gives a security analyst’s expected return on two stocks in two...
Consider the following table, which gives a security analyst’s
expected return on two stocks in two particular scenarios for the
rate of return on the market:
Market Return
Aggressive Stock
Defensive Stock
6
%
–4
%
3
%
21
34
9
a. What are the betas of the two stocks?
(Do not round intermediate calculations. Round your answers
to 2 decimal places.)
Beta
Aggressive stock
Defensive stock
b. What is the expected rate of return on each
stock if the...
Consider the following table, which gives a security analyst’s expected return on two stocks in two...
Consider the following table, which gives a security analyst’s
expected return on two stocks in two particular scenarios for the
rate of return on the market:
Market Return
Aggressive Stock
Defensive Stock
6
%
–4
%
3
%
21
34
9
a. What are the betas of the two stocks?
(Do not round intermediate calculations. Round your answers
to 2 decimal places.)
Beta
Aggressive Stock
Defensive Stock
b. What is the expected rate of return on each
stock if the...
Problem 1. Consider the following table, which gives a security analysts expected return on two stocks...
Problem 1. Consider the following table, which
gives a security analysts expected return on two stocks for two
particular market returns:
States
Market Return
Aggressive Stock
Defensive Stock
Bad
Good
5%
25%
-2%
38%
6%
12%
a) What are the betas of the two stocks?
b) What is the expected rate of return on each stock if the
market return is equally likely to be 5% or 25%?
c) If the T-bill rate is 6% and the market return is...
Problem 9-9 Consider the following table, which gives a security analyst’s expected return on two stocks...
Problem 9-9
Consider the following table, which gives a security analyst’s
expected return on two stocks in two particular scenarios for the
rate of return on the market:
Market Return
Aggressive Stock
Defensive Stock
5
%
–3
%
3
%
27
34
11
a. What are the betas of the two stocks?
(Do not round intermediate calculations. Round your answers
to 2 decimal places.)
b. What is the expected rate of return on each
stock if the two scenarios for...
Consider the following table, which gives a security analyst’s expected return on two stocks in two particular scenarios for the rate of return on the market.
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security analyst’s expected return on two stocks in two particular
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Market Return
Aggressive Stock
Defensive Stock
8%
5%
6%
20%
34%
14%
a. What are the betas of the
two stocks?
b. What is the expected rate
of return on each stock if the market return is equally likely to
be 8% or 20%?
c. What are the alphas of
each?
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