Question

Last year your portfolio made 15%; the stock market made 10%, and the risk free rate...

Last year your portfolio made 15%; the stock market made 10%, and the risk free rate was 2%. If the CAPM is correct, what must the beta of your portfolio be?

Homework Answers

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
Suppose that the rate of return on the market portfolio is 10% and the risk-free rate...
Suppose that the rate of return on the market portfolio is 10% and the risk-free rate is 5%. Consider a stock with beta is 1.3. The firm is expected to have no earnings in the first year (E1 = 0), and then $10 earnings-per-share in the second year (E2 = 10). After that, earnings are expected to grow at a constant annual rate of 8%. The retention ratio is 80% in all periods. What is the market cap and what...
Suppose that the rate of return on the market portfolio is 10% and the risk-free rate...
Suppose that the rate of return on the market portfolio is 10% and the risk-free rate is 5%. Consider a stock with beta is 1.3. The firm is expected to have no earnings in the first year (E1 = 0), and then $10 earnings-per-share in the second year (E2 = 10). After that, earnings are expected to grow at a constant annual rate of 8%. The retention ratio is 80% in all periods. If the market P/E is 8, do...
Market Portfolio Stock A Boom 25% 20% Recession -10% -8% Above is the returns of the...
Market Portfolio Stock A Boom 25% 20% Recession -10% -8% Above is the returns of the market portfolio and stock A in the 2 possible scenarios. The probability of the boom scenario and the recession scenario are both 50%. Please estimate the beta coefficient for stock A. Continuing the previous question. The risk-free interest rate is 1%. According to the beta you estimated in the last question, what is the expected return for stock A according to CAPM? Hint: use...
A portfolio invests in a risk-free asset and the market portfolio has an expected return of...
A portfolio invests in a risk-free asset and the market portfolio has an expected return of 7% and a standard deviation of 10%. Suppose risk-free rate is 5%, and the standard deviation on the market portfolio is 22%. For simplicity, assume that correlation between risk-free asset and the market portfolio is zero and the risk-free asset has a zero standard deviation. According to the CAPM, which of the following statement is/are correct? a. This portfolio has invested roughly 54.55% in...
Assume the CAPM holds. The risk-free rate is 5% and the market portfolio expected return is...
Assume the CAPM holds. The risk-free rate is 5% and the market portfolio expected return is 15% with a standard deviation of 20%. An asset has an expected return of 16% and a beta of 0.8. a) Is this asset return consistent with the CAPM? If not, what expected return is consistent with the CAPM? b) How could an arbitrage profit be made if this asset is observed? c) Would such a situation be expected to exist in the longer...
If the expected rate of return on the market portfolio is 14% and the risk free...
If the expected rate of return on the market portfolio is 14% and the risk free rate is 6% find the beta for a portfolio that has expected rate of return of 10%. What assumptions concerning this portfolio and or market condition do you need to make to calculate the portfolio’s beta? b. what percentage of this portfolio must an individual put into the market portfolio in order to achieve an expected return of 10%?
1. The risk-free rate is 2.3% and the market risk premium is 5.5%. A stock has...
1. The risk-free rate is 2.3% and the market risk premium is 5.5%. A stock has a beta of 1.3, what is its expected return of the stock? (Enter your answers as a percentage. For example, enter 8.43% instead of 0.0843.) 2. Calculate the expected return on a stock with a beta of 1.59. The risk-free rate of return is 4% and the market portfolio has an expected return of 10%. (Enter your answer as a percentage. For example, enter...
Below is the returns of the market portfolio and stock A in the 2 possible scenarios....
Below is the returns of the market portfolio and stock A in the 2 possible scenarios. The probability of the boom scenario and the recession scenario are both 50%. Please estimate the beta coefficient for stock A. (Show all work) Market Portfolio Stock A Boom 25% 20% Recession -10% -8% Continuing the previous question. The risk-free interest rate is 2%. According to the beta you estimated in the last question, what is the expected return for stock A according to...
Assume the market risk is 8% and risk-free rate is 2%. You have a portfolio with...
Assume the market risk is 8% and risk-free rate is 2%. You have a portfolio with $15,000 invested in Stock A with a beta of 1.2, $8,000 in Stock B with a beta of 1.8, and $12,000 in Stock C with a beta of 2.0. What is the beta and expected return of the portfolio?
q20 Your portfolio has a beta of 1.2. The risk-free rate is 5%, and the market...
q20 Your portfolio has a beta of 1.2. The risk-free rate is 5%, and the market portfolio return is 15%. What happens to your portfolio's expected return if the portfolio's beta increases to 1.8, risk-free rate increases to 6%, but the market portfolio return decreases to 10%. Multiple Choice It increases from 13.2% to 17%. It decreases from 24% to 23%. It increases from 23% to 24%. It decreases from 17% to 13.2%. q21. f the EAR of interest is...