based on the CAPM what should be the beta of beta of a stock that has...

based on the CAPM what should be the beta of beta of a stock that has an expected return of 12%, if the risk free is 3.5% and expected return of market portfolio is 12%?

Expert Solution

jeff jeffy answered 2 years ago

A. Alpha and the CAPM A stock with a beta of 0.77 has an expected return...

A. Alpha and the CAPM A stock with a beta of 0.77 has an expected return of 12% and an alpha of 1.5% when the market expected return is 13% . What must be the risk free rate that satisfies these conditions? 2.14% 2.13% 2.16% 2.15% B. Portfolio Beta An investor places $6,000 in Stock A, $5,000 in Stock B and $12,000 in Stock C. Stock A has a beta of 1.05, Stock B has a beta of 1.25 and...

Using CAPM A stock has a beta of 1.15 and an expected return of 11.4 percent....

Using CAPM A stock has a beta of 1.15 and an expected return of 11.4 percent. A risk-free asset currently earns 3.5 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? b. If a portfolio of the two assets has a beta of .7, what are the portfolio weights? c. If a portfolio of the two assets has an expected return of 9 percent, what is its beta? d. If a...

What function does the CAPM fulfill? What is the role of Beta? Explain the role that Beta plays in determining the return on a stock?

What function does the CAPM fulfill? What is the role of Beta? Explain the role that Beta plays in determining the return on a stock? If the market is up 10 percent and the Beta of the stock is 2, what is suggested regarding the expected return on that stock? What if the market is down 10 percent; what then is the expected return on that stock?

Problem 11-16 Using CAPM A stock has a beta of 1.05 and an expected return of...

Problem 11-16 Using CAPM A stock has a beta of 1.05 and an expected return of 11 percent. A risk-free asset currently earns 2.4 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return % b. If a portfolio of the two assets has a beta of .63, what are...

Assume the CAPM holds. Portfolio A has a beta of 1.2. Portfolio B has a beta...

Assume the CAPM holds. Portfolio A has a beta of 1.2. Portfolio B has a beta of 2.4. Which of the following is true? none of the answers listed here. the return on Portfolio A is twice the return on portfolio B. The return on Portfolio B is twice the return on Portfolio A. the return on Portfolio A is half the return on portfolio B. 10 points

Based on the following information, what is the portfolio beta? Stock Value Beta A $47570...

Based on the following information, what is the portfolio beta? Stock Value Beta A $47570 1.14 B $25106 1.88 C $30608 0.72 D $30787 3.38

• Standard Deviation and Variance • The CAPM • Beta Coefficient • Common Stock Valuation Models...

• Standard Deviation and Variance • The CAPM • Beta Coefficient • Common Stock Valuation Models • Company Valuations Develop a 300-500 word informational essay about one of the topics

Based on the investment portfolio information shown below, what is the portfolio’s beta? Stock Investment Beta...

Based on the investment portfolio information shown below, what is the portfolio’s beta? Stock Investment Beta D $465,000 0.7 E $685,000 0.5 F $520,000 1.2

Stock A has a beta of 1.5, but Stock B has a beta of 0.5. You...

Stock A has a beta of 1.5, but Stock B has a beta of 0.5. You expect the market to increase by 7.5 percent and you could earn 2.0 percent in a risk-free asset. What is the required return for each stock? If you invest $3,500 in Stock A and $6,500 in Stock B, what is the portfolio beta?

4. Stock A has a beta of 1.3, Stock B has a beta of 0.8, the...

4. Stock A has a beta of 1.3, Stock B has a beta of 0.8, the expected rate of return on an average stock is 11%, and the risk-free rate of return is 6.5%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? (Work needed)

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