Assume that the risk-free rate is 4.1 percent. If a stock has a beta of 0.5...

Assume that the risk-free rate is 4.1 percent. If a stock has a beta of 0.5 and a required rate of return of 10.1 percent, and the market is in equilibrium, what is the return on the market portfolio? Show your answer to the nearest .1% using whole numbers (e.g., enter 14.1% as 14.1 rather than .141). Your Answer?

An analyst has estimated how a stock's return will vary depending on what will happen to the economy. If a Recession economy occurs (.1 probability), expected return is -60%. If a Below Average economy occurs (.2 probability), expected return is -10%. If an Average economy occurs (.4 probability), expected return is 15%. If an Above Average economy occurs (.2 probability), expected return is 40%. If a Boom economy occurs (.1 probability), expected return is 90%.
What is the expected return and standard deviation on the companys stock?

Expert Solution

jeff jeffy answered 1 year ago

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