User Account

All Pages

What is the expected return on the market

Assignment Help Finance Basics
Reference no: EM131126402

Suppose you observe the following situation:

87_m.jpg

Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-freerate?

Reference no: EM131126402

Questions Cloud

Which stock has the most systematic risk : The market risk premium is 8 percent, and the risk-free rate is 5 percent. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which stock is "riskier"?Explain.
How much money will you invest in stock y : If X has an expected return of 31 percent and a beta of 1.8, Y has an expected return of 20 percent and a beta of 1.3, and the risk-free rate is 7 percent, how much money will you invest in Stock Y? How do you interpret your answer?
Use this information to calculate the security beta : Fill in the following table, supplying all the missing information. Use this information to calculate the security'sbeta.
Calculate beta is to take the covariance : Show that another way to calculate beta is to take the covariance between the security and the market and divide by the variance of the market’s return.
What is the expected return on the market : Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-freerate?
If the risk-free rate is 6 percent and the market risk : Stock Y has a beta of 1.25 and an expected return of 14 percent. Stock Z has a beta of .70 and an expected return of 9 percent. If the risk-free rate is 6 percent and the market risk premium is 7 percent, are these stocks correctly priced?
Illustrate the relationship between portfolio expected retur : Illustrate the relationship between portfolio expected return and portfolio beta by plotting the expected returns against the betas. What is the slope of the line thatresults?
What is the expected return on a portfolio that is equally : a. What is the expected return on a portfolio that is equally invested in the two assets? b. If a portfolio of the two assets has a beta of .5, what are the portfolio weights? c. If a portfolio of the two assets has an expected return of 12 percent, ..
What will the share price be in one year : A share of stock sells for $53 today. The beta of the stock is 1.2, and the expected return on the market is 12 percent. The stock is expected to pay a dividend of $1.10 in one year. If the risk-free rate is 5.5 percent, what will the share price be ..

Reviews

Write a Review

Finance Basics Questions & Answers

  It has an estimated life of 10 years the irr has been

blake corporations new project calls for an investment of 10000. it has an estimated life of 10 years. the irr has been

  A new customer orders a single item which obviously can be

rand company sells fine collectible statues and has implemented activity-based costing. costs in the shipping

  Quartz corporation is a relatively new firm quartz has

quartz corporation is a relatively new firm. quartz has experienced enough losses during its early years to provide it

  Calculate the current ratio and working capital based on

the chief financial officer cfo of padilla corporation requested that the accounting department prepare a preliminary

  Determine the bond proceeds from january first 2014 was

determine the bond proceeds from january first 2014 was the bond issued at a premium or discount or at par value? if

  Cost scheduling

A restaurant operates with two full-time employees who work eight hours per day. The rest of the employees are part-time employees who are scheduled for four hours shifts.

  What advantages might a socialist system

What advantages might a socialist system have in responding to the needs of people struck by an emergency situation like the earthquake that occurred in Haiti in January, 2010?

  Whats going to be the companys new stock price

What impact will this utilization of this debt have on the value of the company - whats going to be the company's EPS after the recapitalization?

  What is fama''s of debt-equity ratio

Fama's has a WACC of 9.8%. The company's cost of equity is 13%, and its cost of debt is 6.5%. The tax-rate is 35%. What is Fama's of debt-equityratio?

  What type of investor might be interested in participating

If Carson issues bonds, it would be a relatively small bond offering. Should Carson consider a private placement of bonds. What type of investor might be interested in participating in a private placement

  Initial public offering or secondary offering of a company

Describes the initial public offering or secondary offering of a company within the last 10 years in the U.S. capital markets, which discusses and analyzes the initial public offering in 7 to 8 pages. The discussion should include the following..

  Is there a particular name brokerage firms and investors

Is there a particular name brokerage firms and investors use to designate the technique, and if so what is it?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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