Answered step by step
Verified Expert Solution
Question
1 Approved Answer
help with both of them please all parts (Related to Checkpoint 8.3) (Systematic risk and expected rates of return) The following table contains beta coefficient
help with both of them please all parts
(Related to Checkpoint 8.3) (Systematic risk and expected rates of return) The following table contains beta coefficient estimates for six firms. Calculate the expected increase in the value of each firm's shares if the market portfolio were to increase by 10 percent. Perform the same calculation where the market drops by 10 percent. Which set of firms has the most variable or volatile stock returns? Input the expected increase in the value of each firm's shares if the market portfolio were to increase by 10%. (Round each answer to two decimal places.) Microsoft Money Company Central (MSN.com) Expected Increase Beta Estimate Computers and Software Apple Inc. (AAPL) 2.38 % Dell Inc. (DELL) 1.44 % Hewlett Packard (HPO) Utilities American Electric Power Co. (AEP) 0.72 % Duke Energy Corp. (DUK) 0.45 Centerpoint Energy (CNP) 0.77 % 1.21 (CAPM and expected returns) a. Given the following holding-period retums, compute the average retums and the standard deviations for the Zemin Corporation and for the market. b. If Zemin's beta is 1.72 and the risk-free rate is 6 percent, what would be an expected return for an investor owning Zemin? (Note: Because the preceding returns are based on monthly data, you will need to annualize the returns to make them comparable with the risk-free rate. For simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by 12.) c. How does Zemin's historical average retum compare with the return you believe you should expect based on the capital asset pricing model and the firm's systematic riskStep 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