Question
(Systematic risk and expected rates of return)The followingtable contains beta coefficient estimates for six firms. Calculate the expected increase in the value of eachfirms shares
(Systematic risk and expected rates of return)The followingtable contains beta coefficient estimates for six firms. Calculate the expected increase in the value of eachfirms 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?
Company | Microsoft Money Central (MSN.com) Beta Estimate | Expected Increase (Round each answer to two decimal places.) |
Computers and Software | ||
Apple Inc. (AAPL) | 2.49 | % |
Dell Inc. (DELL) | 1.44 | % |
Hewlett Packard (HPQ) | 1.27 | % |
Utilities | ||
American Electric Power Co. (AEP) | 0.68 | % |
Duke Energy Corp. (DUK) | 0.36 | % |
Centerpoint Energy (CNP) | 0.88 | % |
Input the expected decrease in the value of each firm's shares if the market portfolio were to decrease by 10%.(Round each answer to two decimal places.)
Company | Microsoft Money Central (MSN.com) Beta Estimate | Expected Decrease (Round each answer to two decimal places.) |
Computers and Software | ||
Apple Inc. (AAPL) | 2.49 | % |
Dell Inc. (DELL) | 1.44 | % |
Hewlett Packard (HPQ) | 1.27 | % |
Utilities | ||
American Electric Power Co. (AEP) | 0.68 | % |
Duke Energy Corp. (DUK) | 0.36 | % |
Centerpoint Energy (CNP) | 0.88 | % |
Which set of firms has the most variable or volatile stock returns?(Select the best choice below.)
A.Utilities
B.Computer and Software firms
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