In: Finance
A stock has an expected return of 0.12, its beta is 0.94, and the risk-free rate is 0.02. What must the expected return on the market be? Enter the answer with 4 decimals (e.g. 0.0567).
You own a stock portfolio invested 32 percent in Stock Q, 22 percent in Stock R, 19 percent in Stock S, and 27 percent in Stock T. The betas for these four stocks are 1.93, 1.64, 0.91, and 1.42, respectively. What is the portfolio beta? Enter the answer with 4 decimals (e.g. 1.1234)
A stock has a beta of 0.64, the expected return on the market is 0.11, and the risk-free rate is 0.05. What must the expected return on this stock be? Enter the answer with 4 decimals (e.g. 0.1234).
You own a portfolio that has $6600 invested in Stock A and $8700 invested in Stock B. If the expected returns on these stocks are 0.01 and 0.29, respectively, what is the expected return on the portfolio?
Enter the answer with 4 decimals (e.g. 0.1234).
ra = 0.12, Beta=0.94, rf=0.02, expected
return on market rm= ?
rm= (0.12-0.02)/0.94 + 0.02
rm= 0.1264
WQ=32%, WR=22%, WS=19%, WT=27%
Q=1.93 R=1.64 S=0.91 T=1.42
Portfolio Beta P= WQ*Q+ WR?*R+WS?*S+WT?*T
Portfolio Beta P= (32%)(1.93) +(22%)(1.64) +(19%)(0.91) +(27%)(1.42)
Portfolio Beta P= 1.5347
=0.64, rm= 0.11, rf =0.05
ra = rf + (rm - rf )
ra = 0.05 + 0.64(0.11-0.05)
ra = 0.05 + 0.0384
ra = 0.0884
Answer : 0.1692
Stock |
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A |
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6600/15300=
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0.01 |
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B | 8700 | 8700/15300=
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0.29 |
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Total |
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