Question
1. Use the following information to answer the question(s) below. Suppose that the market portfolio is equally likely to increase by 24% or decrease by
1.Use the following information to answer the question(s) below.
Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%. Security "X" goes up on average by 29% when the market goes up and goes down by 11% when the market goes down. Security "Y" goes down on average by 16% when the market goes up and goes up by 16% when the market goes down. Security "Z" goes up on average by 4% when the market goes up and goes up by 4% when the market goes down.
What is the risk free rate?
What is the expected return on market portfolio?
What is the expected return on security with a beta of 0.8 is closest to:
3) What is the expected return on security with a beta of 0.8 is closest to:?1?The excess return is the difference between the average return on a security and the average return for:
A) Corporate Bonds.
B) a portfolio of securities with similar risk.
C) a broad based market portfolio like the S&P 500 index.
D) Treasury Bills.
Use the table for the question(s) below.
Consider the following probability distribution of returns for Alpha Corporation:
Current Stock Price ($) | Stock Price in One Year ($) | Return R | Probability PR |
| $35 | 75% | 25% |
$20 | $25 | 25% | 50% |
| $15 | -25% | 25% |
?2) What is the the standard deviation of the return on Alpha Corporation?
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