CAPM potpourri
Can you re- define the CAPM mode as:
E(Ri) – Rf = [E(Rm) - Rf]
a. Yes or not? Why?
Studies have found that Beta is not the only factor that
matters for determining the expected return on a stock
a. Mention 3 other factors that impact
the expected return of the stock and how they could affect
it. Explain
thoroughly
Why Beta was declared “dead” after the market crash of
1987?
a. Explain what...
The capital asset pricing model (CAPM) can be written as E(Ri) =
Rf+ βi[E(Rm) − Rf] using the standard notation. The first step in
using the CAPM is to estimate the stock’s beta using the market
model. The market model can be written as Rit= αi+ βiRmt+ uit where
Rit is the excess return for security i at time t, Rmtis the excess
return on a proxy for the market portfolio at time t, and utis an
iid random disturbance...
The risk-free rate is 6%, the market risk premium (=E(RM) - RF)
is 8%. Assume CAPM holds. A firm has a debt-to-equity ratio of 0.4.
The firm's before-tax cost of debt is 10%. The firm's tax rate is
30%. If it had no debt, its cost of equity would be 16%.
a) What is the beta of the firm's debt?
b) What is the beta of the firm's equity if the firm had no
debt?
c) What is the beta...
Questions for Crystal Violet Lab.
Give the derivation of a first order rate equation and show why
the plots of Ln ([dye]o/[dye]t) vs t should
be linear.
What property other than [dye]t and
[dye]o could have been used for the plot of Ln
([dye]o/[dye]t) vs t? Explain your
answer.
Please show steps
An Educational Psychologist would like to know the relationship
between the
number of hours per week that students study for a course and their
performance in
the test.
a) Compute the Pearson correlation of the data below
b) Determine the significance of the correlation at α .05,
two-tailed by referring
to Table B.6 in the Appendix of your textbook. State whether the
correlation is
significant.
c) Confirm the Pearson correlation by ranking the number of
hours of...
PLEASE SHOW HOW TO SOLVE IN EXCEL SHOW STEPS
Refer to the Johnson Filtration problem introduced in this
section. Suppose that in addition to information on the number of
months since the machine was serviced and whether a mechanical or
an electrical repair was necessary, the managers obtained a list
showing which repairperson performed the service. The revised data
follow.
Repair Time in Hours
Months Since Last Service
Type of Repair
Repairperson
2.9
2
Electrical
Dave Newton
3
6
Mechanical...
for wave equation: u_tt=c^2(u_xx+u_yy)
what is nodal lines and how are they look like?(maybe show me an
example)
and explain what the different modes look like in general.