Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Show all work Thank you 8.1, 8.2, 8.3, 8.4, 8.5 Standared deviation most importantly need to know where the numbers come from i dont understand

Show all work Thank you 8.1, 8.2, 8.3, 8.4, 8.5

Standared deviation most importantly need to know where the numbers come from i dont understand

image text in transcribed

A stock's returns have the following distribution: 8-1 EXPECTED RETURN Probability of this Demand Occurring Demand for the Rate of Return if this Company's Products Demand Occurs Weak (30%) 0.1 Below average 0.1 (14) Average 0.3 11 Above average 0.3 20 Strong 0.2 45 1.0 Assume the risk-free rate is 2%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. 8-2 PORTFOLIO BETA An individual has $20,000 invested in a stock with a beta of 0.6 and another $75,000 invested in a stock with a beta of 2.5. If these are the only two investments in her portfolio, what is her portfolio's beta? 8-3 Assume that the risk-free rate is 5.5% and the required return REQUIRED RATE OF RETURN on the market is 12%. What is the required rate of return on a stock with a beta of 2? 8-4 EXPECTED AND REQUIRED RATES OF RETURN Assume that the risk-free rate is 3.5% and the market risk premium is 4%. What is the required return for the overall stock market? What is the required rate of return on a stock with a beta of 0.8? BETA AND REQUIRED RATE OF RETURN A stock has a required return of 9%, the risk-free rate is 4.5%, and the market risk premium is 3%. 8-5 What is the stock's beta? a. If the market risk premium increased to 5%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. b. EXPECTED RETURNS Stocks A and B have the following probability distributions of expected future returns: 8-6

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions

Question

Describe the components of identity.

Answered: 1 week ago