Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Can you please answer these problems, I need the answer within the next 36 hours. Thanks. 1. Suppose a stock had an initial price of
Can you please answer these problems, I need the answer within the next 36 hours. Thanks.
1. Suppose a stock had an initial price of $72 per share, paid a dividend of $2.60 per share during the year, and had an ending share price of $84. Compute the percentage total return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Total return _______% 2. Suppose you bought a bond with a coupon rate of 5.2 percent paid annually one year ago for $920. The bond sells for $970 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Total dollar return. $_________ b. What was your total nominal rate of return on this investment over the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Nominal rate of return _________% c. If the inflation rate last year was 1.5 percent, what was your total real rate of return on this investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Real rate of return. ________% 3. You've observed the following returns on SkyNet Data Corporation's stock over the past five years: 15 percent, -6 percent, 18 percent, 14 percent, and 10 percent. Suppose the average inflation rate over this period was 1.7 percent, and the average T-bill rate over the period was 5.2 percent. a. What was the average real return on the stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average real return. _________% b. What was the average nominal risk premium on the stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) Average nominal risk premium. _________% 4. A stock has had returns of 17.12 percent, 12.28 percent, 6.16 percent, 27.34 percent, and 13.69 percent over the past five years, respectively. What was the holding period return for the stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Holding-period return. _________% 5. You purchased a zero coupon bond one year ago for $121.53. The market interest rate is now 8 percent. If the bond had 27 years to maturity when you originally purchased it, what was your total return for the past year? Assume semiannual compounding. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Total return. _________% 6. A stock has had returns of 6 percent, 24 percent, 16 percent, 12 percent, 31 percent, and 6 percent over the last six years. What are the arithmetic and geometric average returns? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Arithmetic average return _________ % Geometric average return. _________ % 7. Assume the returns on an asset are normally distributed. Suppose the historical average annual return for the asset was 6 percent and the standard deviation was 18.5 percent. What is the probability that your return on this asset will be less than -8.9 percent in a given year? Use the NORMDIST function in Excel to answer this question. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Probability. __________ % What range of returns would you expect to see 95 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 95% level________% to ________% What range would you expect to see 99 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 99% level___________% to __________% 8. What are the portfolio weights for a portfolio that has 136 shares of Stock A that sell for $46 per share and 116 shares of Stock B that sell for $36 per share? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) Portfolio weights Stock A. _________ Stock B. _________ 9. You own a portfolio that has $3,700 invested in Stock A and $4,700 invested in Stock B. If the expected returns on these stocks are 9 percent and 12 percent, respectively, what is the expected return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Portfolio expected return ___________% 10. You own a portfolio that is 30 percent invested in Stock X, 25 percent in Stock Y, and 45 percent in Stock Z. The expected returns on these three stocks are 9 percent, 18 percent, and 14 percent, respectively. What is the expected return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Portfolio expected return ___________% 11. ou have $26,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 15 percent and Stock Y with an expected return of 11 percent. If your goal is to create a portfolio with an expected return of 13.68 percent, how much money will you invest in Stock X? In Stock Y? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Amount invested Stock X $______ Stock Y $______ 12. You own a stock portfolio invested 35 percent in Stock Q, 20 percent in Stock R, 25 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are .94, 1.11, 1.12, and 1.29, respectively. What is the portfolio beta? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Portfolio beta ________ 13. You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.29 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.) Stock beta __________ 14. A stock has a beta of 1.10, the expected return on the market is 12 percent, and the risk-free rate is 3.6 percent. What must the expected return on this stock be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return. _________% 15. A stock has an expected return of 12 percent, the risk-free rate is 5 percent, and the market risk premium is 7 percent. What must the beta of this stock be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Beta of stock _________ 16. A stock has a beta of 1.10 and an expected return of 12 percent. A risk-free asset currently earns 2.6 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return. _________% b. If a portfolio of the two assets has a beta of .77, what are the portfolio weights? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) . Weight of stock. _________ Risk-free weight. _________ c. If a portfolio of the two assets has an expected return of 9 percent, what is its beta? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) Beta. _________ d. If a portfolio of the two assets has a beta of 2.20, what are the portfolio weights? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.) Weight of stock. _________ Risk-free weight _________ 17. You have $300,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 10.45 percent. Stock X has an expected return of 9.84 percent and a beta of 1.24, and Stock Y has an expected return of 7.08 percent and a beta of .78. How much money will you invest in Stock Y? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Investment in Stock Y $. _________ What is the beta of your portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Portfolio beta. _________ 18. Security F has an expected return of 11.40 percent and a standard deviation of 44.40 percent per year. Security G has an expected return of 16.40 percent and a standard deviation of 63.40 percent per year. a. What is the expected return on a portfolio composed of 26 percent of Security F and 74 percent of Security G? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return. _________% b. If the correlation between the returns of Security F and Security G is .21, what is the standard deviation of the portfolio described in part (a)? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation. _________% 19. Suppose you observe the following situation: Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return on market $ % What is the risk-free rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Risk-free rate %Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started