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You want to add an additional stock to your portfolio and are considering two alternatives. For stock A, the expected return is 14.20% and the beta is 1.62. For stock B, the expected return is 8.40% and the beta is 0.46. The risk-free rate is 4.6% and the expected return on the market portfolio is 11.6%. According to the Capital Asset Pricing Model, which statement about adding these securities to your portfolio is most accurate?
a. Add either one, since for both the expected returns exceed required returns.
b. Add only A because its beta is larger than Bs beta.
c. Add only stock B since its expected return is the only one to exceed its required return.
d. Add only stock A since its expected return is the only one to exceed its required return.
e. Add neither, since both have expected returns less than required returns.
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A pension fund that begins with $500,000 earns 15% the first year and 10% the second year. At the beginning of the second year, the sponsor contributes another $300,000. Using a ba II plus calculate the dollar-weighted rate of return.
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What will be the total deduction for social security and Medicare taxes on Rony's next semi monthly pay check of $3,960, if she has already earned $42,560 this year? (Social security tax is 6.2% of gross wages up to $106,800. Medicare tax is 1.45% of..
A stock has an expected return of 15 percent, its beta is 1.55, and the risk-free rate is 6.5 percent. What must the expected return on the market be?
On 3 August 2011 Ross Creek Ltd declared and paid a dividend of $10000 from profits earned prior to its acquisition by Sebastopol Ltd. The directors consider that the value of the investment in Ross Creek Ltd has been impaired and have adjusted the p..
Which one of the following will increase the maximum rate of growth a corporation can achieve?
The project is to study the changing trends of the Indian Markets due to the foreign investments, in particular FIIs, its impact, being the single largest investor class in the Indian Markets with respect to current issues.
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