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c . D . f . Estimate Bartman's and Reynolds's betas by running regressions of their returns against the index's returns. Round your answers to
c
D
f Estimate Bartman's and Reynolds's betas by running regressions of their returns against the index's returns. Round your answers to four decimal places.
Bartman's beta:
Reynolds's beta:
Are these betas consistent with your graph?
These betas
consistent with the scatter diagrams.
g Assume that the riskfree rate on longterm Treasury bonds is Assume also that the average annual return on the Winslow is not a good estimate of
the market's required returnit is too high. So use as the expected return on the market. Use the SML equation to calculate the two companies' required
returns. Round your answers to two decimal places.
Bartman's required return:
Reynolds's required return:
h If you formed a portfolio that consisted of Bartman and Reynolds, what would the portfolio's beta and required return be Round your answer for the
portfolio's beta to four decimal places and for the portfolio's required return to two decimal places.
Portfolio's beta:
Portfolio's required return:
i Suppose an investor wants to include Bartman Industries's stock in his portfolio. Stocks A B and C are currently in the portfolio, and their betas are
and respectively. Calculate the new portfolio's required return if it consists of of Bartman, of Stock A of Stock B and of Stock
C Round your answer to two decimal places.
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