(a)   The market considers Intel Corp (INTC) of all these stocks to be the riskiest since it has the highest beta of 1.497408. No, this measure of risk does not include the idiosyncratic risk of the stock. The idiosyncratic error will be included in the ε item in the market model of each stock.

(b)  Intel Corp (INTC) had price changes that were least closely related to the market, because it has the highest beta and hence more variation from the returns of S&P.

(c)   Apple (AAPL) has the highest expected returns. The average monthly return for this stock is 0.0234130, which is the highest of all stocks and this occurs even when the index returns are zero or flat.

(d)  With the given information and the given equation,

Expected return of HD = 0.0195538 + 1.089703*10% = 0.128524 = 12.8524%

Thus the expected return of HD is 12.8524% for the next month, with the given predictions (ignoring error term).

 

Posted Date: 3/8/2013 6:16:12 AM | Location : United States

Ask an Expert

Related Discussions:- Idiosyncratic risk of the stock, Assignment Help, Ask Question on Idiosyncratic risk of the stock, Get Answer, Expert's Help, Idiosyncratic risk of the stock Discussions

Write discussion on Idiosyncratic risk of the stock
Your posts are moderated

Write your message here..

Related Questions

Operating and capital leases, In 200 words or more, discuss the issues that... In 200 words or more, discuss the issues that relate to the accounting for operating and capital leases. In your posting, please articulate issues that the accountant faces in r

Financial accounting theory, accountability through conceptual framework in... accountability through conceptual framework in australia eassy on this topic with research

Written inquiries for financial information, Q. Written inquiries for finan... Q. Written inquiries for financial information? Inquiry - A procedure which comprises seeking information both financial and non-financial, of knowledgeable persons throughout

Trade sources of information, Trade Sources of Information Within for i... Trade Sources of Information Within for instance the credit card industry it isn't uncommon for information on an individual's credit rating to be shared. In a alike vein withi

What factors in preview company''s control environment, WILL SOMEONE PLEASE... WILL SOMEONE PLEASE ASSIST ME WITH THIS ASSISGNMENT Preview Company, a diversified manufacturer, has five divisions that operate throughout the United States and Mexico. Preview ha

Prepare journal entries to record liquidation transaction, Terry Marks is a... Terry Marks is a well-known architect. He wants to start his own business and convinces Rob Norris, his cousin and a civil engineer, to contribute capital. Together, they form a pa

Capital expenditures of the firms - corporate stockholders, The concern upp... The concern uppermost in Sonia Burdett's mind at present was how to effectively communicate to the firm's Board of Directors the soundness of her financial policies. Ms. Burdett is

Disclaimer-liquidation of companies, Disclaimer The liquidator may disc... Disclaimer The liquidator may disclaim onerous property consisting of: 1.    Land burdened with onerous covenants; 2.    Stocks and shares; 3.    Unprofitable contracts, or 4.

Assume that you are the president of gaslight company., Assume that you are... Assume that you are the president of Gaslight company. At the end of the year (December 31, 2011 of operation.

OPERATING CYCLE, APPLICABILITY OF THE OPERATING CYCLE IN VEGETABLE GROWING ... APPLICABILITY OF THE OPERATING CYCLE IN VEGETABLE GROWING BUSINESS