Question

1. Your investment club has only two stocks in its portfolio. $30,000 is invested in a stock with a beta of 0.5, and $45,000 is invested in a stock with a beta of 1.8. What is the portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.

2. AA Corporation's stock has a beta of 0.8. The risk-free rate is 3%, and the expected return on the market is 11%. What is the required rate of return on AA's stock? Do not round intermediate calculations. Round your answer to one decimal place.

3. Suppose that the risk-free rate is 4% and that the market risk premium is 6%. Round your answers to one decimal place.

- What is the required return on the market?

%

- What is the required return on a stock with a beta of 1.0?

%

- What is the required return on a stock with a beta of 1.3?.

%

4. An analyst has modeled the stock of a company using the
Fama-French three-factor model. The market return is 8%, the return
on the SMB portfolio (r_{SMB}) is 2.4%, and the return on
the HML portfolio (r_{HML}) is 5.0%. If a_{i} = 0,
b_{i} = 1.2, c_{i} = -0.4, and d_{i} = 1.3,
what is the stock's predicted return? Do not round intermediate
calculations. Round your answer to two decimal places.

Answer #1

1a. Your investment club has only two stocks in its portfolio.
$50,000 is invested in a stock with a beta of 0.9, and $75,000 is
invested in a stock with a beta of 1.3. What is the portfolio's
beta? Do not round intermediate calculations. Round your answer to
two decimal places.
1b. AA Corporation's stock has a beta of 0.4. The risk-free rate
is 2%, and the expected return on the market is 12%. What is the
required rate of...

Your investment club has only two stocks in its portfolio.
$50,000 is invested in a stock with a beta of 0.8, and $30,000 is
invested in a stock with a beta of 2.0. What is the portfolio's
beta?
AA Corporation's stock has a beta of 1.1. The risk-free rate is
4%, and the expected return on the market is 13%. What is the
required rate of return on AA's stock? Do not round intermediate
calculations. Round your answer to two...

Your investment club has only two stocks in its portfolio.
$50,000 is invested in a stock with a beta of 0.9, and $75,000 is
invested in a stock with a beta of 1.7. What is the portfolio's
beta? Do not round intermediate calculations. Round your answer to
two decimal places.

Fama-French Three-Factor Model
An analyst has modeled the stock of a company using the
Fama-French three-factor model. The market return is 11%, the
return on the SMB portfolio (rSMB) is 3.4%, and the
return on the HML portfolio (rHML) is 5.6%. If
ai = 0, bi = 1.2, ci = -0.4, and
di = 1.3, what is the stock's predicted return? Do not
round intermediate calculations. Round your answer to two decimal
places.
=

Fama-French Three-Factor Model An analyst has modeled the stock
of a company using a Fama-French three-factor model. The risk-free
rate is 5%, the market return is 12%, the return on the SMB
portfolio (rSMB) is 2.3%, and the return on the HML portfolio
(rHML) is 5.5%. If ai = 0, bi = 1.2, ci = - 0.4, and di = 1.3, what
is the stock's predicted return? Round your answer to two decimal
places. %

ou are holding a portfolio with the following investments and
betas: Stock Dollar investment Beta A $300,000 1.3 B 200,000 1.5 C
300,000 0.65 D 200,000 -0.2 Total investment $1,000,000 The
market's required return is 9% and the risk-free rate is 4%. What
is the portfolio's required return? Do not round intermediate
calculations. Round your answer to three decimal places.

You own a portfolio equally invested in a risk-free asset and
two stocks. One of the stocks has a beta of 1.2 and the total
portfolio is equally as risky as the market.
What must the beta be for the other stock in your portfolio?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
Beta

You own a portfolio equally invested in a risk-free asset and
two stocks. One of the stocks has a beta of 1.15 and the total
portfolio is equally as risky as the market.
What must the beta be for the other stock in your portfolio?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
Beta

AA Corporation's stock has a beta of 0.9. The risk-free rate is
3%, and the expected return on the market is 9%. What is the
required rate of return on AA's stock? Do not round intermediate
calculations. Round your answer to one decimal place.

An individual has $30,000 invested in a stock with a beta of 0.4
and another $50,000 invested in a stock with a beta of 2.2. If
these are the only two investments in her portfolio, what is her
portfolio's beta? Do not round intermediate calculations. Round
your answer to two decimal places.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 4 minutes ago

asked 15 minutes ago

asked 23 minutes ago

asked 31 minutes ago

asked 31 minutes ago

asked 37 minutes ago

asked 39 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago