A stock has a beta of 0.6 and an expected return of 10 percent. A risk-free...

A stock has a beta of 0.6 and an expected return of 10 percent. A risk-free asset currently earns 4.1 percent.

a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. If a portfolio of the two assets has a beta of 0.57, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Stock:

Risk Free Asset:

c. If a portfolio of the two assets has an expected return of 8.25 percent, what is its beta? (Do not round intermediate calculations.Round your answer to 4 decimal places.)

d. If a portfolio of the two assets has a beta of 1.10, what are the portfolio weights? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

Stock:

Risk Free Asset:

Expert Solution

jeff jeffy answered 1 year ago

A stock has a beta of 1.6 and an expected return of 14 percent. A risk-free...

A stock has a beta of 1.6 and an expected return of 14 percent. A risk-free asset currently earns 4 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 0.8, what are the portfolio weights? c) If a portfolio of the two assets has an expected return of 10 percent, what is its beta? d) If all assets in...

A stock has a beta of 0.9 and an expected return of 9 percent. A risk-free...

A stock has a beta of 0.9 and an expected return of 9 percent. A risk-free asset currently earns 4 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If a portfolio of the two assets has a beta of 0.5, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers...

A stock has a beta of 1.38 and an expected return of 13.6 percent. A risk-free...

A stock has a beta of 1.38 and an expected return of 13.6 percent. A risk-free asset currently earns 4.7 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 .98, what are the portfolio weights? (Do not...

A stock has a beta of 1.3 and an expected return of 12.8 percent. A risk-free...

A stock has a beta of 1.3 and an expected return of 12.8 percent. A risk-free asset currently earns 4.3 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 .90, what are the portfolio weights? (Do not...

A stock has a beta of 0.5 and an expected return of 9.6 percent. A risk-free...

A stock has a beta of 0.5 and an expected return of 9.6 percent. A risk-free asset currently earns 3.3 percent. If a portfolio of the two assets has an expected return of 12 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Netflix common stock has a beta=0.6. The risk-free rate is 9%, and the market return is...

Netflix common stock has a beta=0.6. The risk-free rate is 9%, and the market return is 14%. a. Determine the risk premium on Netflix common stock. b. Determine the required return that Netflix common stock should provide. c. Determine Netflix's cost of common stock equity using the CAPM.

A stock has a beta of 2.2, the risk-free rate is 6 percent, and the expected...

A stock has a beta of 2.2, the risk-free rate is 6 percent, and the expected return on the market is 12 percent. Using the CAPM, what would you expect the required rate of return on this stock to be? What is the market risk premium?

Evaluating risk and return. Stock X has an expected return of 9.5 percent, a beta coefficient...

Evaluating risk and return. Stock X has an expected return of 9.5 percent, a beta coefficient of 0.9, and a 30 percent standard deviation of expected returns. Stock Y has a 13 percent expected return, a beta coefficient of 1.3, and a 20 percent standard deviation. The risk-free rate is 5 percent, and the market risk premium is 5.5 percent. a) Calculate the coefficient of variation of each stock. b) Which stock is riskier for diversified investors? Which stock is...

Adidas stock has a beta of 1.3. The risk-free rate is 2.7% and the expected return on the market portfolio is 10%.

Adidas stock has a beta of 1.3. The risk-free rate is 2.7% and the expected return on the market portfolio is 10%. The company has just paid an annual dividend of $0.25. Dividends are expected to grow by 2% per year.Part 1What is the appropriate discount rate?Part 2What is the intrinsic value (fair price) of the stock?

A stock has an expected return of 0.07, its beta is 0.75, and the risk-free rate...

A stock has an expected return of 0.07, its beta is 0.75, and the risk-free rate is 0.03. What must the expected return on the market be? Enter the answer with 4 decimals (e.g. 0.0567).

Question