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Use the following information to answer the questions. Security Beta Standard deviation Expected return Market Risk-free Firm A Firm B Firm C 1.0 0.0 1.5
- Use the following information to answer the questions.
| Security | Beta | Standard deviation | Expected return |
| Market Risk-free Firm A Firm B Firm C | 1.0 0.0 1.5 ( ) 2.0 | 10% 2% 30% 20% 25% | 8.0% 4.0% ( )% 6.0% ( )% |
- Figure out the market risk premium.
- Figure out the expected return for Firm A.
- Figure out the beta for Firm B
- Compare Firm A with Firm C.
- Which firm has higher total risk? Firm A or C?
- Which firm has higher expected return? Firm A or C?
- Among three kinds of risk: total risk, systematic risk, and unsystematic risk. Which risk remains even after forming a diversified portfolio?
- Among three kinds of risk: total risk, systematic risk, and unsystematic risk, which risk affects the expected return on a stock?
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Authors: Jack Jones
1st Edition
1545269920, 978-1545269923
