Wk 5-Practice Wk 5 Practice Questions (due Day 51 7 Seved Suppose that the Treasury bill rate is 9% rather than 4%, as we assumed in Table 121, and the expected return on the market is 13% Use the betas in that table to answer the following questions a. When you assume this higher risk-free interest rate, what makes sense for how you should modify your assumption about the rate of return on the market portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) b. Recalculate the expected return on the stocks in Table 12 (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) ebook be c. Suppose now that you continued to assume that the expected return on the market remained at 12%. Now what would be the expected returns on each stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) d. Ford offer a higher or lower expected return if the interest rate is 9% rather than 4% e. Walmart offer a higher or lower expected return of the interest rate is 9% rather than 4%? 8. Market retum would have to fall b. Expected retum W C. Expected retum Ford's expected tun Walmart's expected retur 1 ponts 14. . 1% Help Save & Ch Suppose that the Treasury bill rate is 9% rather than 4%, as we assumed in Table 12.1, and the expected return on the market is 13% Use the betas in that table to answer the following questions a. When you assume this higher risk-free interest rate, what makes sense for how you should modify your assumption about the rate of return on the market portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) b. Recalculate the expected return on the stocks in Table 121. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. Suppose now that you continued to assume that the expected return on the market remained at 13% Now what would be the expected returns on each stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) s d. Ford offer a higher or lower expected retum if the interest rate is 9% rather than 4%? e. Walmart offer a higher or lower expected return if the interest rate is 9% rather than 4%? A would have to fall Market return b Expected return C Expected retur % d. Ford's expected return 0. Walmart's expected return Lower Higher TABLE 12.1 Bets for selected common stocks, January 2013-December 2017 Ticker X MRO AMZN DIS F BA INTC GE PFE IBM GOOG UNP XOM SBUX KO MCD CPB WMT PCG NEM Company US Steel Marathon Oil Amazon Disney Ford Boeing Intel GE Pfizer IBM Alphabet Union Pacific ExxonMobil Starbucks Coca-Cola McDonald's Campbell Soup Walmart Pacific Gas & Electric Newmont Mining b Beta 3.01 2.39 1.47 1.39 1.26 1.24 1.07 1.06 1.02 0,94 0.94 0.90 0.82 0.75 0.70 0.68 0.40 0.37 0.15 0.10 Wk 5-Practice Wk 5 Practice Questions (due Day 51 7 Seved Suppose that the Treasury bill rate is 9% rather than 4%, as we assumed in Table 121, and the expected return on the market is 13% Use the betas in that table to answer the following questions a. When you assume this higher risk-free interest rate, what makes sense for how you should modify your assumption about the rate of return on the market portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) b. Recalculate the expected return on the stocks in Table 12 (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) ebook be c. Suppose now that you continued to assume that the expected return on the market remained at 12%. Now what would be the expected returns on each stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) d. Ford offer a higher or lower expected return if the interest rate is 9% rather than 4% e. Walmart offer a higher or lower expected return of the interest rate is 9% rather than 4%? 8. Market retum would have to fall b. Expected retum W C. Expected retum Ford's expected tun Walmart's expected retur 1 ponts 14. . 1% Help Save & Ch Suppose that the Treasury bill rate is 9% rather than 4%, as we assumed in Table 12.1, and the expected return on the market is 13% Use the betas in that table to answer the following questions a. When you assume this higher risk-free interest rate, what makes sense for how you should modify your assumption about the rate of return on the market portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) b. Recalculate the expected return on the stocks in Table 121. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. Suppose now that you continued to assume that the expected return on the market remained at 13% Now what would be the expected returns on each stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) s d. Ford offer a higher or lower expected retum if the interest rate is 9% rather than 4%? e. Walmart offer a higher or lower expected return if the interest rate is 9% rather than 4%? A would have to fall Market return b Expected return C Expected retur % d. Ford's expected return 0. Walmart's expected return Lower Higher TABLE 12.1 Bets for selected common stocks, January 2013-December 2017 Ticker X MRO AMZN DIS F BA INTC GE PFE IBM GOOG UNP XOM SBUX KO MCD CPB WMT PCG NEM Company US Steel Marathon Oil Amazon Disney Ford Boeing Intel GE Pfizer IBM Alphabet Union Pacific ExxonMobil Starbucks Coca-Cola McDonald's Campbell Soup Walmart Pacific Gas & Electric Newmont Mining b Beta 3.01 2.39 1.47 1.39 1.26 1.24 1.07 1.06 1.02 0,94 0.94 0.90 0.82 0.75 0.70 0.68 0.40 0.37 0.15 0.10
