Question
(Systematic risk and expected rates of return)The following table, LOADING... , contains beta coefficient estimates for six firms. Calculate the expected increase in the value
(Systematic risk and expected rates of return)The following table,
LOADING...
,
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?
ompany
Yahoo Finance
(Yahoo.com)
Computers and Software
Apple Inc. (AAPL)
2.98
Dell Inc. (DELL)
1.36
Hewlett Packard (HPQ)
1.45
Utilities
American Electric Power Co. (AEP)
0.61
Duke Energy Corp. (DUK)
0.55
Centerpoint Energy (CNP)
0.78
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.)
| Company | Yahoo Finance (Yahoo.com) Beta Estimate | Expected Increase |
| Computers and Software | ||
| Apple Inc. (AAPL) | 2.98 | % |
| Dell Inc. (DELL) | 1.36 | % |
| Hewlett Packard (HPQ) | 1.45 | % |
| Utilities | ||
| American Electric Power Co. (AEP) | 0.61 | % |
| Duke Energy Corp. (DUK) | 0.55 | % |
| Centerpoint Energy (CNP) | 0.78 | % |
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
13th Edition
1260772381, 978-1260772388
