Question
In: Finance
Year IBM’s yearly stock return Yearly return on the S&P500 1999 17.02% 21.04% 2000 -21.21% -9.10%...
|
Year |
IBM’s yearly stock return |
Yearly return on the S&P500 |
|
1999 |
17.02% |
21.04% |
|
2000 |
-21.21% |
-9.10% |
|
2001 |
13.09% |
-1.89% |
|
2002 |
16.22% |
-22.10% |
The riskless rate for this period is 3.5%, and the covariance between returns on IBM stock and the S&P500 over this period is 0.02276.
1E. What is the variance of the S&P500 over this period? 2 points
1F. What is IBM’s CAPM beta according to this data? 5 points
1G. What is IBM’s CAPM cost of equity according to this data? 5 points
1H. If IBM’s debt to equity ratio is 0.57, what is their unlevered cost of equity according to this model? 5 points
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Year IBM’s yearly stock return Yearly return on the S&P500 1999 17.02% 21.04% 2000 -21.21% -9.10%...
Year
IBM’s yearly stock return
Yearly return on the S&P500
1999
17.02%
21.04%
2000
-21.21%
-9.10%
2001
13.09%
-1.89%
2002
16.22%
-22.10%
The riskless rate for this period is 3.5%, and the covariance
between returns on IBM stock and the S&P500 over this period is
0.02276.
1F. What is IBM’s CAPM beta according to this data?
1G. What is IBM’s CAPM cost of equity according to this
data?
1H. If IBM’s debt to equity ratio is 0.57, what is their...
Year IBM’s yearly stock return Yearly return on the S&P500 1999 17.02% 21.04% 2000 -21.21% -9.10%...
Year
IBM’s yearly stock return
Yearly return on the S&P500
1999
17.02%
21.04%
2000
-21.21%
-9.10%
2001
13.09%
-1.89%
2002
16.22%
-22.10%
The riskless rate for this period is 3.5%, and the covariance
between returns on IBM stock and the S&P500 over this period is
0.02276.
1E. What is the variance of the S&P500 over this period?
1F. What is IBM’s CAPM beta according to this data?
1G. What is IBM’s CAPM cost of equity according to this
data?
1H....
Question 1. Year IBM’s yearly stock return Yearly return on the S&P500 1999 17.02% 21.04% 2000...
Question 1.
Year
IBM’s yearly stock return
Yearly return on the S&P500
1999
17.02%
21.04%
2000
-21.21%
-9.10%
2001
13.09%
-1.89%
2002
16.22%
-22.10%
The riskless rate for this period is 3.5%, and the covariance
between returns on IBM stock and the S&P500 over this period is
0.02276.
1E. What is the variance of the S&P500 over this
period?
1F. What is IBM’s CAPM beta according to this data?
1G. What is IBM’s CAPM cost of equity according to this...
Compute the total return on all of these in the respective market: 1. The S&P500 stock...
Compute the total return on all of these in the respective
market:
1. The S&P500 stock index closes at 2250 at the end of
March. At the end of June, the index closes at
2475. Assume the S&P500 has a divided yield of 3%
annually.
2. The S&P500 stock index closes at 2500 at the end of
December. The following June, the index
closes at 2400. Assume the S&P500 has a divided yield of 2%
annually.
3. A Treasury bond...
It turns out empirically that when a stock that was previously not included in the S&P500...
It turns out empirically that when a stock that was
previously not included in the S&P500 Index is included, and
one that was in the index is excluded, there are price impacts to
both stocks.
a. If the announcement of the change in the composition
of the index was made 2 weeks prior to the change, what would you
expect to happen in the two weeks leading up to the change?
Why?
b. What would you expect to happen to...
Below are returns on the stock A and S&P500 index. All numbers are in decimals (-0.0222...
Below are returns on the stock A and S&P500 index. All
numbers are in decimals (-0.0222 is equivalent to -2.22%).
A
S_P500
-0.0222
0.0032
-0.0048
-0.0058
0.1333
0.0434
0.0765
0.1081
-0.0161
-0.0121
0.1250
0.1400
0.0145
0.0368
-0.0475
-0.0454
0.0430
0.0577
-0.0260
-0.1374
0.0071
0.0064
0.0249
0.0186
0.0850
0.0215
-0.0624
-0.0752
0.0933
0.0365
0.0456
0.0528
-0.0632
-0.0131
0.0450
0.0009
0.0200
0.0017
0.0280
0.0985
Suppose that the next S&P500 return will be 7%. Use the CAPM
model to calculate the expected return...
Below are returns on the stock A and S&P500 index. All numbers are in decimals (-0.0222...
Below are returns on the stock A and S&P500 index. All
numbers are in decimals (-0.0222 is equivalent to -2.22%).
A
S_P500
-0.0222
0.0032
-0.0048
-0.0058
0.1333
0.0434
0.0765
0.1081
-0.0161
-0.0121
0.1250
0.1400
0.0145
0.0368
-0.0475
-0.0454
0.0430
0.0577
-0.0260
-0.1374
0.0071
0.0064
0.0249
0.0186
0.0850
0.0215
-0.0624
-0.0752
0.0933
0.0365
0.0456
0.0528
-0.0632
-0.0131
0.0450
0.0009
0.0200
0.0017
0.0280
0.0985
Assuming normal distribution, what is the probability that the
next S&P500 return will be greater than 0?
Please...
Below are returns on the stock A and S&P500 index. All numbers are in decimals (-0.0222...
Below are returns on the stock A and S&P500 index. All
numbers are in decimals (-0.0222 is equivalent to -2.22%).
A
S_P500
-0.0222
0.0032
-0.0048
-0.0058
0.1333
0.0434
0.0765
0.1081
-0.0161
-0.0121
0.1250
0.1400
0.0145
0.0368
-0.0475
-0.0454
0.0430
0.0577
-0.0260
-0.1374
0.0071
0.0064
0.0249
0.0186
0.0850
0.0215
-0.0624
-0.0752
0.0933
0.0365
0.0456
0.0528
-0.0632
-0.0131
0.0450
0.0009
0.0200
0.0017
0.0280
0.0985
What is the sample standard deviation of the stock A
returns?
Please write an answer in decimals. For...
Below are returns on the stock A and S&P500 index. All numbers are in decimals (-0.0222...
Below are returns on the stock A and S&P500 index. All
numbers are in decimals (-0.0222 is equivalent to -2.22%).
A
S_P500
-0.0222
0.0032
-0.0048
-0.0058
0.1333
0.0434
0.0765
0.1081
-0.0161
-0.0121
0.1250
0.1400
0.0145
0.0368
-0.0475
-0.0454
0.0430
0.0577
-0.0260
-0.1374
0.0071
0.0064
0.0249
0.0186
0.0850
0.0215
-0.0624
-0.0752
0.0933
0.0365
0.0456
0.0528
-0.0632
-0.0131
0.0450
0.0009
0.0200
0.0017
0.0280
0.0985
Assuming normal distribution, what is the probability that the
next stock A return will be less than 0?...
Question 6 Acme Enterprises has a beta of 1.25. The historic return of the S&P500 has...
Question 6
Acme Enterprises has a beta of 1.25. The historic return of the
S&P500 has been 10.12% per year, and 3-month T-bills have
returned 3.56% per year compounded annually. Using these historic
returns as predictors of future returns, what the required return
[or expected return] of Acme Enterprises?
Select one:
a. 11.0 percent to 12.0 percent
b. 10.0 percent to 11.0 percent
c. More than 12.0%
d. Less than 9.0 percent
e. 9.0 percent to 10.0 percent
Question 7...
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