Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Oct 02, 2024

Suppose the market risk premium is 10%, market volatility (s M ) is 30% and the risk-free rate is 2%. Stock A has a volatility

Suppose the market risk premium is 10%, market volatility (s_M) is 30% and the risk-free rate is 2%.

Stock A has a volatility (s_A) of 60% and a correlation (r_A,M) with the market portfolio of 25%. According to the CAPM,

1) What is its beta?

2) What is its expected return?

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

Day Trading Strategies And Risk Management

Authors: Richard N. Williams

1st Edition

979-8863610528

More Books

Students also viewed these Finance questions

Question

★★★★★

Use the Target Corporations annual report in Appendix B to answer the following questions. a. Who are the independent auditors for Target? b. What type of opinion did the independent auditors issue...

Answered: 1 week ago

Question

★★★★★

Business objectives are used to make project's scope decisions True False

Answered: 1 week ago

Question

★★★★★

Discuss the benefits of sharing the data with the team/key colleagues.

Answered: 1 week ago

Question

★★★★★

You are an industry analyst who specializes in an industry where the market inverse demand is P 200 4Q. The external marginal cost of producing the product is MCExternal = 6Q, and the internal cost...

Answered: 1 week ago

Question

★★★★★

Suppose the market risk premium is 10%, market volatility (s M ) is 30% and the risk-free rate is 2%. Stock A has a volatility (s A ) of 60% and a correlation (r A,M ) with the market portfolio of...

Answered: 1 week ago

Question

★★★★★

On 1/3/2016, one of the associations received 4250,000 dinars for the purpose of constructing a mosque. What was spent during 2016 amounted to 1175,000 dinars. On 15/8/2017, the mosque building was...

Answered: 1 week ago

Question

★★★★★

Crazy Canucks is a small, family-owned retailer specializing in alpine ski and snowboard equipment located in Squamish, B.C. An income statement for the ski department's most recent month is shown...

Answered: 1 week ago

Question

★★★★★

On January 1, 2025, Bramble Company purchased 12% bonds having a maturity value of $312,000 for $335,654.22. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2025, and...

Answered: 1 week ago

Question

★★★★★

How much pressure does a box whose sides are 1.78 m long each exert on the ground due to gravity? Assume that the box has a mass of 25.7 kg

Answered: 1 week ago

Question

★★★★★

Comparing cash and accrual basic accounting and applying the revenue recognition principle and the matching principle Sweet Catering completed the following selected transactions during May 2014: May...

Answered: 1 week ago

Question

★★★★★

A newly renovated hotel in downtown Phoenix offers guests $10 off one night stay for each referral. By rewarding guests for making a guest referral, the hotel is encouraging guests to perform which...

Answered: 1 week ago

Previous Question Next Question