Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer all parts. Question 3, P8-11 (simil... Part 1 of 7 HW Score: 76%, 3.8 of 5 points O Points: 0 of 1 Save

please answer all parts.
image text in transcribed
image text in transcribed
image text in transcribed
Question 3, P8-11 (simil... Part 1 of 7 HW Score: 76%, 3.8 of 5 points O Points: 0 of 1 Save (CAPM and expected returns) a. Given the following holding-period returns, compute the average returns and the standard deviations for the Zemin Corporation and for the market. b. if Zemin's beta is 0.91 and the risk-free rate is 7 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 return compare with the return you believe you should expect based on the capital asset pricing model and the firm's systematic risk? a. Given the holding-period returns shown in the table, the average monthly return for the Zemin Corporation is %. (Round to two decimal places.) uestion 3, P8-11 (simil... Part 1 of 7 > HW Score: 76%, 3.8 of 5 points O Points: 0 of 1 xpected returns) following holding.neriod returns ! comnute the average returns and the standard deviations for Data table Month Zemin Corp. Market 1 7% 3% 2 5 3 3 0 2 4 -4 -3 5 7 1 6 3 3 (Click on the icon in order to copy its contents into a spreadsheet.) N - Print Done Question 2, P7-7 (simila... Part 2 of 5 HW Score: 68.57%, 2.06 of 3 points Points: 0.2 of 1 Save (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Common Stock B Probability Return Probability Return 0.20 12% 0.25 - 6% 0.60 16% 0.25 0.20 20% 0.25 15% 0.25 20% (Click on the icon in order to copy its contents into a spreadsheet.) 5% a. Given the information in the table, the expected rate of return for stock Ais 16 %. (Round to two decimal places.) The standard deviation of stock A is % (Round to two decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

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

Financial Management For Technology Start Ups

Authors: Alnoor Bhimani

2nd Edition

1398603082, 978-1398603080

More Books

Students also viewed these Finance questions