Question
In: Finance
Q1/Given the following information about the returns of stocks A, B, and C, what is the...
Q1/Given the following information about the returns of stocks A, B, and C, what is the expected return of a portfolio invested 30% in stock A, 40% in stock B, and 30% in stock C?
| State of economy | Probability | Stock A | Stock B | Stock C |
|---|---|---|---|---|
| Boom | 0.12 | 0.2 | 0.23 | 0.37 |
| Good | 0.24 | 0.15 | 0.12 | 0.18 |
| Poor | 0.25 | 0 | 0.08 | 0.09 |
| Bust | -- | -0.13 | -0.2 | -0.18 |
Enter answer in percents.
Q2/A stock has an expected return of 10.2 percent, the risk-free rate is 5.7 percent, and the market risk premium is 6.5 percent. What must the beta of this stock be?
Q3/You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 0.76 and the total portfolio is equally as risky as the market. What must the beta be for the other stock in your portfolio?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Q1/Given the following information about the returns of stocks A, B, and C, what is the...
Q1/Given the following information about the returns of stocks
A, B, and C, what is the expected return of a portfolio invested
30% in stock A, 40% in stock B, and 30% in stock C?
State of
economy
Probability
Stock A
Stock B
Stock C
Boom
0.15
0.24
0.31
0.23
Good
0.21
0.19
0.14
0.12
Poor
0.25
0.01
0.08
0.04
Bust
--
-0.29
-0.16
-0.19
Enter answer in percents.
Q2/GIMP Inc., is trying to determine its cost of debt. The...
Given the following information about the returns of stocks A, B, and C, what is the...
Given the following information about the returns of stocks A,
B, and C, what is the expected return of a portfolio invested 30%
in stock A, 40% in stock B, and 30% in stock C?
State of Economy
Probability
Stock A
Stock B
Stock C
Boom
0.19
0.36
0.24
0.37
Good
0.22
0.21
0.12
0.24
Poor
0.28
0.06
0
0.02
Bust
--
-0.1
-0.27
-0.25
Answer must be in percents!
Given the following information about the returns of stocks A, B, and C, what is the...
Given the following information about the returns of stocks A,
B, and C, what is the expected return of a portfolio invested 30%
in stock A, 40% in stock B, and 30% in stock C?
State of economy
Probability
Stock A
Stock B
Stock C
Boom
0.14
0.33
0.36
0.26
Good
0.29
0.29
0.15
0.27
Poor
0.21
0
0.01
0.02
Bust
--
-0.19
-0.21
-0.11
Enter answer in percents.
12. Given the following information about the returns of stocks A, B, and C, what is...
12. Given the following information about the returns of stocks
A, B, and C, what is the expected return of a portfolio invested
30% in stock A, 40% in stock B, and 30% in stock C?
State of economy
Probability
Stock A
Stock B
Stock C
Boom
0.19
0.36
0.21
0.39
Good
0.23
0.23
0.22
0.23
Poor
0.25
0.06
0.07
0.06
Bust
--
-0.14
-0.1
-0.21
Enter answer in percents.
Consider the following information for three stocks, Stocks A, B, and C. The returns on the...
Consider the following information for three stocks, Stocks A,
B, and C. The returns on the three stocks are positively
correlated, but they are not perfectly correlated. (That is, each
of the correlation coefficients is between 0 and 1.)
Stock
Expected Return
Standard Deviation
Beta
A
7.94
16
0.7
B
9.62
16
1.1
C
11.72
16
1.6
Fund P has one-third of its funds invested in each of the three
stocks. The risk-free rate is 5%, and the market is...
Consider the following information for Stocks A, B, and C. The returns on the three stocks...
Consider the following information for Stocks A, B, and C. The
returns on the three stocks are positively correlated, but they are
not perfectly correlated. (that is, each of the correlation
coefficients is between 0 and 1).
Stock Expected Return Standard Deviation Beta
A 9.55% 15.00% 0.9
B 10.45% 15.00% 1.1
C 12.70% 15.00% 1.6
Fund P has one-third of its funds invested in each of the
three stocks. The risk-free rate is 5.5%, and the market is in
equilibrium....
Consider the following information for stocks A, B, and C. The returns on the three stocks...
Consider the following information for stocks A, B, and C. The
returns on the three stocks are positively correlated, but they are
not perfectly correlated. (That is, each of the correlation
coefficients is between 0 and 1.)
Stock
Expected Return
Standard Deviation
Beta
A
9.35%
15%
0.7
B
12.65
15
1.3
C
14.85
15
1.7
Fund P has one-third of its funds invested in each of the three
stocks. The risk-free rate is 5.5%, and the market is in
equilibrium....
Consider the following information for stocks A, B, and C. The returns on the three stocks...
Consider the following information for stocks A, B, and C. The
returns on the three stocks are positively correlated, but they are
not perfectly correlated. (That is, each of the correlation
coefficients is between 0 and 1.)
Stock
Expected Return
Standard Deviation
Beta
A
8.65%
16%
0.7
B
10.45
16
1.1
C
12.25
16
1.5
Fund P has one-third of its funds invested in each of the three
stocks. The risk-free rate is 5.5%, and the market is in
equilibrium....
Consider the following information for stocks A, B, and C. The returns on the three stocks...
Consider the following information for stocks A, B, and C. The
returns on the three stocks are positively correlated, but they are
not perfectly correlated. (That is, each of the correlation
coefficients is between 0 and 1.)
Stock
Expected Return
Standard Deviation
Beta
A
8.75%
14%
0.9
B
9.75
14
1.3
C
10.75
14
1.7
Fund P has one-third of its funds invested in each of the three
stocks. The risk-free rate is 6.5%, and the market is in
equilibrium....
Consider the following information for three stocks, Stocks A, B, and C. The returns on the...
Consider the following information for three stocks, Stocks A,
B, and C. The returns on the three stocks are positively
correlated, but they are not perfectly correlated. (That is, each
of the correlation coefficients is between 0 and 1.)
Stock
Expected Return
Standard Deviation
Beta
A
9.34
%
14
%
0.8
B
11.26
14
1.2
C
13.18
14
1.6
Fund P has one-third of its funds invested in each of the three
stocks. The risk-free rate is 5.5%, and the...
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