A calculator with a linear regression function

Assignment Help Finance Basics
Reference no: EM131125668

You are given the following set of data:

Historical Rates of Return



Stock X























a. Use a spreadsheet (or a calculator with a linear regression function) to determine Stock X"s beta coefficient.

b. Determine the arithmetic average rates of return for Stock X and the NYSE over the period given. Calculate the standard deviations of returns for both Stock X and the NYSE.

c. Assume that the situation during Years 1 to 7 is expected to prevail in the future (i.e., ^r x ¼ ¯rx; ^rM ¼ ¯rM, and both sX and bX in the future will equal their past values). Also assume that Stock X is in equilibrium-that is, it plots on the Security Market Line. What is the risk-free rate?

d. Plot the Security Market Line.

e. Suppose you hold a large, well-diversified portfolio and are considering adding to that portfolio either Stock X or another stock, Stock Y, which has the same beta as Stock X but a higher standard deviation of returns. Stocks X and Y have the same expected returns: ^r x ¼ ^ry ¼ 10:6%. Which stock should you choose?

Reference no: EM131125668

Management and directors of the company

Select a company listed in the Australian Stock Exchange (ASX) and prepare a report (2000 words) covering the following aspects of the company using at least three annual r

Favorite multinational firm and determine

1. Go to the Web site of your favorite multinational firm and determine where it operates throughout the world. How many employees does it have world- wide? Has it done any

Aluminum each year to manufacture bracelet blanks

2. BB currently uses 3,000 ingots of aluminum each year to manufacture bracelet blanks. The order cost (including shipping) is $5,000 per order, and carrying costs are $75 p

Numerous opportunities to expand in foreign countries

DFI Strategy. JCPenney has recognized numerous opportunities to expand in foreign countries and has assessed many foreign markets, including Brazil, Greece, Mexico, Portugal

Consider the industrial supply company example

Consider the Industrial Supply Company example (Table 4.4) again. Assume that the company plans to maintain its dividend payments at the same level in 2011 as in 2010. Also

The nominal interest rate

You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized over 5 years (60 months), and the nominal interest rate would be 12%, with i

The primary objective of business organizations

The primary objective of business organizations is to maximize shareholder value. What is "shareholder value" and how is it measured? Do you think that maximizing shareholde

Never pay another dividend

Maloney, Inc., has an odd dividend policy. The company has just paid a dividend of $6 per share and has announced that it will increase the dividend by $5 per share for each


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd