Question

Interpreting beta???A firm wishes to assess the impact of changes in the market return on an asset that has a beta of 0.80.8. a.??If the market return increased by 1515?%, what impact would this change be expected to have on the? asset's return? b. If the market return decreased by 66?%, what impact would this change be expected to have on the? asset's return? c.??If the market return did not? change, what? impact, if? any, would be expected on the? asset's return? d.??Would this asset be considered more or less risky than the? market? a.??If the market return increased by 1515?%, the impact on the? asset's return is nothing?%. ?(Round to one decimal place. Enter a negative percentage number if the asset return? decreases.) b.??If the market return decreased by 66?%, the impact on the? asset's return is nothing?%. ?(Round to one decimal place. Enter a negative percentage number if the asset return? decreases.) c.??If the market return did not? change, the impact on the? asset's return is nothing?%. ?(Round to one decimal place. Enter a negative percentage number if the asset return? decreases.) d.??Would this asset be considered more or less risky than the? market????(Select from the? drop-down menus.) The asset is ? less risky than more risky than equally risky as the market? portfolio, which has a beta of ? .

Answer #1

Change in asset's return = beta*change in market's return

a) if the market return increase by 15%, the assets' return will increase by 0.8*15% = 12%

So, the assets's return will increase by 12%

b) If the market return decreased by 6%, the asset's return will decrease by 0.8*6% = 4.8%

So, the assets's return will decrease by 4.8%

c) There will be no impact on the return of the asset if the market return did not change.

d) The sset is less risky than the market because the beta is less than 1.

Market portfolio has a beta of 1.

Interpreting beta A firm wishes to assess the impact of
changes in the market return on an asset that has a beta of
0.7.
a. If the market return increased by 20%, what impact would
this change be expected to have on the asset's return?
b. If the market return decreased by 8%, what impact would this
change be expected to have on the asset's return?
c. If the market return did not change, what impact, if any,
would be...

A security has a beta of 1.20. Is this security more or less
risky than the market? Explain. Assess the impact on the required
return of this security in each of the following cases.
1). The market return increases by 15%. b. The market return
decreases by 8%. c. The market return remains unchanged.
A security has a beta of 1.20. Is this security more or less
risky than the market? (Select the best choice below.)
A. The security and...

Stock X has a 10.5% expected return, a beta coefficient of 1.0,
and a 35% standard deviation of expected returns. Stock Y has a
12.0% expected return, a beta coefficient of 1.1, and a 30.0%
standard deviation. The risk-free rate is 6%, and the market risk
premium is 5%.
Calculate each stock's coefficient of variation. Round your
answers to two decimal places. Do not round intermediate
calculations.
CVx =
CVy =
Which stock is riskier for a diversified investor?
For...

Stock X has a 9.5% expected return, a beta coefficient of 0.8,
and a 30% standard deviation of expected returns. Stock Y has a
12.0% expected return, a beta coefficient of 1.1, and a 25.0%
standard deviation. The risk-free rate is 6%, and the market risk
premium is 5%.
Calculate each stock's coefficient of variation. Round your
answers to two decimal places. Do not round intermediate
calculations.
CVx =
CVy =
Which stock is riskier for a diversified investor?
For...

Stock X has a 10.5% expected return, a beta coefficient of 1.0,
and a 35% standard deviation of expected returns. Stock Y has a
12.5% expected return, a beta coefficient of 1.2, and a 20.0%
standard deviation. The risk-free rate is 6%, and the market risk
premium is 5%. Calculate each stock's coefficient of variation.
Round your answers to two decimal places. Do not round intermediate
calculations. CVx = CVy = Which stock is riskier for a diversified
investor? For...

Stock X has a 10.5% expected return, a beta coefficient of 1.0,
and a 30% standard deviation of expected returns. Stock Y has a
12.0% expected return, a beta coefficient of 1.1, and a 30.0%
standard deviation. The risk-free rate is 6%, and the market risk
premium is 5%.
Calculate each stock's coefficient of variation. Round your
answers to two decimal places. Do not round intermediate
calculations.
CVx =
CVy =
Which stock is riskier for a diversified investor?
For...

Stock X has a 10.0% expected return, a beta coefficient of 0.9,
and a 35% standard deviation of expected returns. Stock Y has a
12.0% expected return, a beta coefficient of 1.1, and a 25.0%
standard deviation. The risk-free rate is 6%, and the market risk
premium is 5%.
Calculate each stock's coefficient of variation. Round your
answers to two decimal places. Do not round intermediate
calculations.
CVx =
CVy =
Which stock is riskier for a diversified investor?
For...

Stock X has a 9.5% expected return, a beta coefficient of 0.8,
and a 35% standard deviation of expected returns. Stock Y has a
12.5% expected return, a beta coefficient of 1.2, and a 30.0%
standard deviation. The risk-free rate is 6%, and the market risk
premium is 5%.
Calculate each stock's coefficient of variation. Round your
answers to two decimal places. Do not round intermediate
calculations.
CVx = _____
CVy = _____
Which stock is riskier for a diversified...

The Treasury bill rate
is 6%, and the expected return on the market portfolio is 14%.
According to the capital asset pricing model:
a. What is the risk premium on the market?
b. What is the required return on an investment
with a beta of 1.4? (Do not round intermediate
calculations. Enter your answer as a percent rounded to 1 decimal
place.)
c. If an investment with a beta of 0.6 offers an
expected return of 8.4%, does it have...

The Treasury bill rate is 5%, and the expected return on the
market portfolio is 13%. According to the capital asset pricing
model:
a. What is the risk premium on the market?
b. What is the required return on an investment
with a beta of 1.8? (Do not round intermediate
calculations. Enter your answer as a percent rounded to 1 decimal
place.)
c. If an investment with a beta of 0.6 offers an
expected return of 8.8%, does it have...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 21 minutes ago

asked 49 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago