Question
In: Finance
You have been provided with the following data about the securities of three firms, the market...
You have been provided with the following data about the securities of three firms, the market portfolio, and the risk-free asset:
|
Security |
Expected return |
Standard deviation |
Correlation with the market portfolio |
Beta |
|
Firm A |
0.10 |
0.31 |
? (a) |
0.85 |
|
Firm B |
0.14 |
?(b) |
0.50 |
1.40 |
|
Firm C |
0.16 |
0.65 |
0.35 |
?(c) |
|
The market portfolio |
0.12 |
0.20 |
?(d) |
?(e) |
|
The risk-free asset |
0.05 |
?(f) |
?(g) |
?(h) |
- Fill in the missing values in the table. Show your work please.
- Is the stock of firm A correctly priced according to the CAPM? Firm B? Firm C? If these securities are not correctly priced, what is your investment recommendation for someone with a well-diversified portfolio?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
You have been provided the following data on the securities of three firms and the market:...
You have been provided the following data on the
securities of three firms and the market:
Security
E[Rj]
sj
rjM
bj
Firm A
0.13
.12
?
.90
Firm B
0.16
?
0.40
1.10
Firm C
0.25
0.24
0.75
?
Market
0.15
0.10
1
1
Risk-free
0.05
0
0
0
Assume the CAPM holds
true.
Fill in the missing values in the table.
0.9 =
(rjM)(0.12) /
0.10
ri,m=
.75
bj =
(rjM)(sj)
/ sm
= .4
(sj)
/ .10...
You have been provided the following data on the securities of three firms, the market portfolio,...
You have been provided the following data on the securities of
three firms, the market portfolio, and the risk-free asset:
a. Fill in the missing values in the table.
(Leave no cells blank - be certain to enter 0 wherever
required. Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.)
Security
Expected
Return
Standard
Deviation
Correlation*
Beta
Firm A
.105
.36
.80
Firm B
.145
.55
1.35
Firm C
.165
.60
.40
The market...
You have been provided the following data on the securities of three firms, the market portfolio,...
You have been provided the following data on the securities of
three firms, the market portfolio, and the risk-free asset:
a. Fill in the missing values in the table.
(Leave no cells blank - be certain to enter 0 wherever
required. Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.)
Security
Expected
Return
Standard
Deviation
Correlation*
Beta
Firm A
.104
.35
.81
Firm B
.144
.54
1.36
Firm C
.164
.61
.39
The market...
You have been provided the following data on the securities of three firms, the market portfolio,...
You have been provided the following data on the securities of
three firms, the market portfolio, and the risk-free asset:
a. Fill in the missing values in the table.
(Leave no cells blank - be certain to enter 0 wherever
required. Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.)
Security
Expected Return
Standard Deviation
Correlation*
Beta
Firm A
.101
.32
_____
.84
Firm B
.141
_____
.51
1.39
Firm C
.161
.64
.36...
The following data have been provided to you: (all amounts are in dollars) ...
The following data have been provided to you: (all amounts are
in dollars)
April May
Sales 150,000 157,500
Merchandise purchases 107,000 112,400
Operating expenses:
Payroll 13,600
14,280
Advertising 5,400
5,700
Rent 2,500
2,500
Depreciation 7,500
7,500
End of April balances:
Cash 30,000
Bank loan payable
26,000
Additional data:
Sales are 40% cash and 60% on...
You have been provided the following information inc. debt: the market value is 50000 the bonds...
You have been provided the following information inc.
debt: the market value is 50000 the bonds are currently yielding
9% and have a coupon rate of 8%.
common: 2000 shares outstanding, selling for $60 per share; the
beta is 1.2
stock: preferred 500 shares of preferred stock outstanding,
currently selling for $75 per share
Stock: that pays 7.5 in dividends per year per share
market: 8 percent market risk premium and 3.4 percent risk-free
rate.
1. compute the capital structure...
You have been provided information on summary statistical data for two neighborhoods. Specifically, you have been...
You have been provided information on summary statistical data
for two neighborhoods. Specifically, you have been provided
calculations on the Average Price Per Square Foot, Average Age and
Average, and the Average Prices for houses in the two neighborhoods
and the Standard Deviation of each variable. Apply the method of
Confidence Intervals at (97%) to Estimate answer the question
whether:
Average Age of House in each neighborhood is significantly
different from 60 years
Average Price of Houses in each neighborhood...
You have the following information about three securities A, B, and C: Security Expected return Beta...
You have the following information about three securities A, B,
and C:
Security
Expected return
Beta
A
24%
2.0
B
7%
0.5
C
2%
0
Given this information, you can definitely conclude that:
A.
All three securities are underpriced
B.
A, B, and C are fairly priced
C.
At least two of the three securities are mispriced
D.
At least one of A, B, or C is mispriced
In recent years, several securities firms have been guilty of using inside information when purchasing securities,...
In recent years, several securities firms have been guilty of
using inside information when purchasing securities, thereby
achieving returns well above the norm (even when accounting for
risk). Does this suggest that the security markets are not
efficient? Explain.
You have been hired as a research assistant and are given the following data about another...
You have been hired as a research assistant and are given the
following data about another economy
Corporate income tax $20000
Profits $44000
Rent $25000
Indirect business taxes $21000
Business profits $75000
Plant and equipment $2,400
Net foreign factor imports $-5,900
Interest $22,185
Social security contribution $65,000
Transfer payments $80,000
Wages $900
Personal taxes $175
Calculate the GDP using the factor payment approach. Show work.
___________________
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