Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on May 17, 2024

Consider the following information: Expected Return Beta Risk Free 7% 0 Market 12.2 1.0 A 11.0 1.6 a. Calculate the return predicted by CAPM for

Consider the following information:

Expected Return Beta

Risk Free 7% 0

Market 12.2 1.0

A 11.0 1.6

a.Calculate the return predicted by CAPM for a portfolio with a beta of 1.6.(Round your answer to 2 decimal places.)

b.What isthe alpha of portfolioA.(Negative value should be indicated by a minus sign.Round your answer to 2 decimal places.)

c.If the simple CAPM is valid, is the situation above possible?

Yes or No?

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

Recommended Textbook for

International Financial Reporting Standards An Introduction

Authors: Belverd E. Needles, Marian Powers

3rd Edition

1133187943, 978-1133187943

More Books

Students also viewed these Finance questions

Question

QUESTION 101 POINT Find the area to the right of the z-score 0.41 under the standard normal...

Answered: 1 week ago

Question

Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $60. The stock will pay a dividend at year-end of $2.00. Assume...

Answered: 1 week ago

Question

Your company has preferred stock that has an annual dividend of $ 2.25. If the current price is $ 18 , what is the cost of preferred stock ?

Answered: 1 week ago

Question

★★★★★

Use Eq. (13) to show that (x, y) = ln r is harmonic. 1 Af = frr + fee + = fr 1 2

Answered: 1 week ago

Question

★★★★★

Palomus Controls currently produces and sells 20,000 regulators monthly. At this level, its variable cost per regulator is $26 and its fixed cost per regulator is $7. The companys monthly breakeven...

Answered: 1 week ago

Question

★★★★★

=b. Lydia decides that she doesnt want to invest more than 40 percent in any individual stock. While still ignoring risk, what is her new optimal investment portfolio? What is the total risk of her...

Answered: 1 week ago

Question

★★★★★

=+23. Defect monitoring. The following data are from a production process that makes 200 units each hour. The data were collected over a normal 12-hour shift one day. The data are shown in the table...

Answered: 1 week ago

Question

★★★★★

How does the strategic plan influence preparation of the master budget?

Answered: 1 week ago

Question

★★★★★

Below are the transactions of the company in December 2022: Dec 1 Issued 1,000 shares of share capital in exchange for $10,000 cash 2 Borrowed $11,000 from bank by issuing 6-month notes payable. 3...

Answered: 1 week ago

Question

★★★★★

Analyse how procurements performance contributes to the organisations profitability or value adds in cost avoidance, sustainability or in any other area in food industry

Answered: 1 week ago

Question

★★★★★

Crystal wants life insurance that will diversify her financial portfolio and build wealth. She is searching for a policy that uses an investment method that has the potential to grow at a maximum...

Answered: 1 week ago

Question

★★★★★

Mention and explain the job description of Distribution and Exhibition do fast and need correct answer with good explanation

Answered: 1 week ago

Question

★★★★★

3. Assignment Task Question No 1 a) Which is better, an investment that earns 10% compounded quarterly, one that earns 9.95% compounded monthly, or one that earns 9.9% compounded continuously? b) The...

Answered: 1 week ago

Question

★★★★★

Please do a to c a) Figure 3.1 shows the light intensity on a screen behind a single slit. The slit width is 0.20 mm and the screen is 1.5 m behind the slit. What is the wavelength (in nm) of the...

Answered: 1 week ago

Question

★★★★★

On Nov 8 th , the 4 % , 3 0 - year U . S T - bond has quoted ( asked ) price 1 0 2 . 1 2 5 0 , it paid interest 6 2 days ago . What s the actual sale price? ( The bond pays interest every 1 8 2 days....

Answered: 1 week ago

Question

★★★★★

D Question 10 1 pts Supposed someone offered you the choice of two equally risky annuities, each paying $10,000 per year for five years. One is an ordinary (or deferred) annuity, the other is an...

Answered: 1 week ago

Question

★★★★★

A Bloomberg Businessweek subscriber study asked, In the past 12 months, when traveling for business, what type of airline ticket did you purchase most often? A second question asked if the type of...

Answered: 1 week ago

Question

★★★★★

Explainhowaboardgameusingdice,suchasSnakesandLadders,hasasequenceofoutcomes that satisfiestheMarkovproperty.

Answered: 1 week ago

Question

★★★★★

For n coin-flip betsasdescribedin Section 2.6.7, let pn denote theproportionof t between1 and n for whichthetotalwinnings Yt at time t is positive. (a) With n = 100,...

Answered: 1 week ago

Question

★★★★★

Let (Y1, Y2, ...,Yc) denote independentPoissonrandomvariables,withparameters (1,2, ...,c). (a) Explainwhythejointprobabilitymassfunctionfor {Yi} is c i=1 [exp(i)yi i ~yi!] for...

Answered: 1 week ago

Previous Question Next Question