Question

1. Your investment club has only two stocks in its portfolio. $30,000 is invested in a...

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.

  1. What is the required return on the market?

  %

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

  %

  1. 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 (rSMB) is 2.4%, and the return on the HML portfolio (rHML) is 5.0%. 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.

Homework Answers

Answer #1

In the fourth question the risk free rate is missing, Im posting remaining three and the formula for the fourth. Simply substitute them.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1a. Your investment club has only two stocks in its portfolio. $50,000 is invested in a...
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...
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...
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...
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...
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...
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...
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...
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...
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...
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
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT