Construct a scatter diagram showing the relationship

Assignment Help Finance Basics
Reference no: EM131100718

You are given the following set of data:
Construct a scatter diagram showing the relationship between returns on Stock Y and the market. Use a spreadsheet or a calculator with a linear regression function to estimate beta.
b. Give a verbal interpretation of what the regression line and the beta coefficient show about Stock Y's volatility and relative riskiness as compared with those of other stocks.
c. Suppose the scatter of points had been more spread out, but the regression line was exactly where your present graph shows it. How would this affect (1) the firm's risk if the stock is held in a one-asset portfolio and (2) the actual risk premium on the stock if the CAPM holds exactly?
d. Suppose the regression line had been downward sloping and the beta coefficient had been negative. What would this imply about (1) Stock Y's relative riskiness, (2) its correlation with the market, and (3) its probable risk premium?

368_hh.jpg

Reference no: EM131100718

Questions Cloud

What is the closest that the comet comes to the sun : What is the closest that the comet comes to the sun? Explain your method.
Question regarding the technique of last resort : Why is simulation often called a technique of last resort? Must you use a computer to get good information from a simulation? Explain.
Based on the symptoms and signs that the child exhibited : She is most concerned because her uncle has been diagnosed with muscular dystrophy (MD) and worries that she may carry the gene - child exhibited what may be the diagnosis?
What price will the profit maximizing monopolist charge : What price will the profit maximizing monopolist charge? What is the value of consumer surplus under monopoly? What is the value of producer surplus under monopoly? What is the value of deadweight loss?
Construct a scatter diagram showing the relationship : You are given the following set of data: Construct a scatter diagram showing the relationship between returns on Stock Y and the market. Use a spreadsheet or a calculator with a linear regression function to estimate beta. b. Give a verbal interpreta..
Use a spreadsheet to determine stock x''s beta coefficient : 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 ..
Solve a spreadsheet model for this problem : At a small but growing airport, the local airline company is purchasing a new tractor for a tractor-trailer train to bring luggage to and from the airplanes. A new mechanized luggage system will be installed in 3 years, so the tractor will not be ..
Concept of entrepreneurial motivation : 1. What is the concept of entrepreneurial motivation and how has it been depicted? 2. Explain the concept of entrepreneurial persistence and how it is being examined.
Which security is more risky and why? : Security A has an expected rate of return of 6 percent, a standard deviation of expected returns of 30 percent, a correlation coefficient with the market of - 0.25, and a beta coefficient of 0.5. Security B has an expected return of 11 percent, a st..

Reviews

Write a Review

Finance Basics Questions & Answers

  How long will it take to double her investment

How much does Joe have to save in each year for the next 15 years to reach this goal - how much would Joe have needed to save each year if he had started when retirement was 25 years away?

  Truman industries is considering an expansion the necessary

truman industries is considering an expansion. the necessary equipment would be purchased for 9 million and it would

  Include both inpatient and outpatient revenue and expense

Budget assumptions for this exercise include both inpatient and outpatient revenue and expense. Assumptions are as follows: As to the initial budget: The budget anticipated 30,000 inpatient days this year at an average of $650 revenue per day.

  How a zero coupon bond provide profit

How a zero coupon bond provide profit?

  Doublewide dealers has an roa of 10 percent a 2 percent

doublewide dealers has an roa of 10 percent a 2 percent profit margin and a return on equity equal to 15 percent. what

  Determine effective annual rate of interest

The corporation you work for will deposit $600 at the end of each month in your retirement fund. Interest is compounded monthly. You plan to retire fifteen years from now and estimate that you will need $2000 each month out of the account for the nex..

  Describe a call option on interest rate futures how does it

1. describe a call option on interest rate futures. how does it differ from purchasing a futures contract?2. describe a

  As your companys risk manager you are looking for

as your companys risk manager you are looking for protection against adverse interest rate changes in five years. using

  Determine the free cash flow from the purchase of the xc-750

While the expected new sales will be $10 million per year from the expansion, estimates range from $8 million to $12 million. What is the NPV in the worst case? In the best case?

  Computing payment for sales

Suppose each month has thirty days and AmDocs has a sixty-day accounts receivable period. In the second calendar quarter of year (April, May and June), AmDocs will gather payment for sales it made during which of the months listed below?

  Discuss the difference between direct measurement

Discuss the difference between direct measurement and indirect measurement.  Give examples of each in an accounting context.

  Does this mean the market risk premium we should use in the

From the start of 1999 to the start of 2009, the S&P 500 had a negative return. Does this mean the market risk premium we should use in the CAPM is negative?

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