Reference no: EM131299166
Answer the following questions and complete the following problems:
Questions
In a Word document, respond to the following. Number your responses 1-2.
1. Explain why expected return is considered forward-looking. What challenges arise in using expected return?
2. Explain how differences in allocations between the risk-free security and the market portfolio can determine the level of market risk.
Use references to support your responses as needed. Be sure to cite all references using correct APA style. Your responses should be free of grammar and spelling errors, demonstrating strong written communication skills.
Problems
In either a Word document or Excel spreadsheet, complete the following problems.
- You may solve the problems algebraically, or you may use a financial calculator or an Excel spreadsheet.
- If you choose to solve the problems algebraically, be sure to show your computations.
- If you use a financial calculator, show your input values.
- If you use an Excel spreadsheet, show your input values and formulas.
1. Based on the probability and percentage of return for the three economic states in the table below, compute the expected return.
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Economic State
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Probability
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Percentage of Return
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Fast Growth
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0.10
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60
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Slow Growth
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0.50
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30
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Recession
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0.40
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-23
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2. If the risk-free rate is 7 percent and the risk premium is 4 percent, what is the required return?
3. Suppose that the average annual return on the Standard and Poor's 500 Index from 1969 to 2005 was 14.8 percent. The average annual T-bill yield during the same period was 5.6 percent. What was the market risk premium during these 10 years?
4. Conglomco has a beta of 0.32. If the market return is expected to be 12 percent and the risk-free rate is 5 percent, what is Conglomco's required return? Use the capital asset pricing model (CAPM) to calculate Conglomco's required return.
5. Calculate the beta of a portfolio that includes the following stocks:
- Conglomco stock, which has a beta of 3.9 and comprises 35 percent of the portfolio.
- Supercorp stock, which has a beta of 1.7 and comprises 25 percent of the portfolio.
- Megaorg stock, which has a beta of 0.3 and comprises 40 percent of the portfolio.
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Market clearing device in rural credit markets
: How does your answer to A) change if the probability of repayment falls to 60%? In the context of this application, explain why interest rates are often not used as a market clearing device in rural credit markets.
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Explain from given equation what happens to output sidebands
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What is the real interest rate
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Write a research article critically analysing it strategy
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Explain why expected return is considered forward-looking
: Explain why expected return is considered forward-looking. What challenges arise in using expected return? Explain how differences in allocations between the risk-free security and the market portfolio can determine the level of market risk
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Why the pll suppresses the vco phase noise
: Explain why the PLL suppresses the VCO phase noise (within the loop bandwidth) but not the sidebands due to the ripple.
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Calculate the expected return from project
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Determine the pll output phase noise
: Consider the PLL shown in Figure,- If the amplifier exhibits an input-referred flicker noise density given by α/f, determine the PLL output phase noise.
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Is it also proper to make a pie chart of these data
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