How does expected return vary with beta

Assignment Help Finance Basics
Reference no: EM132804494

Suppose that the S&P 500, with a beta of 1.0, has an expected return of 14% and T-bills provide a risk-free return of 5%.

a. What would be the expected return and beta of portfolios constructed from these two assets with weights in the S&P 500 of (i) 0; (ii) 0.25; (iii) 0.50; (iv) 0.75; (v) 1.0? (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter the value of Expected return as a percentage rounded to 2 decimal places and value of Beta rounded to 2 decimal places.)

b. How does expected return vary with beta? (Do not round intermediate calculations.)

Reference no: EM132804494

Questions Cloud

Accreditation and certification on health service delivery : Prepare a PowerPoint presentation for all staff members of the Mucho County Healthcare System to acquaint them with accreditation and certification
What is the implied annual interest rate inherent : The March CBOT Treasury bond futures contract has a quoted price of 115'09. What is the implied annual interest rate inherent in this futures contract?
Investors expectation of the price of the stock : If the stock is perceived to be fairly priced today, what must be investors' expectation of the price of the stock at the end of the year?
Is jorell pricing policy supported by cost differences : Is Jorell's pricing policy supported by cost differences in serving the two different classes of customer? Support your answer with relevant calculations
How does expected return vary with beta : Suppose that the S&P 500, with a beta of 1.0, has an expected return of 14% and T-bills provide a risk-free return of 5%.
What is the effective annual yield : Question - Magic Software has 7.25% coupon bonds on the market with 15 years to maturity. What is the Effective Annual Yield
What is the risk premium on the market : The Treasury bill rate is 6%, and the expected return on the market portfolio is 10%. According to the capital asset pricing model:
Calculate the sum of carrying cost and the shortage cost : XYZ is a retailer and sells 198,000 units. Suppose XYZ orders 5,000 units per order from the supplier. Calculate the sum of carrying cost and the shortage cost.
Find the spending variance for materials and supplies : The actual materials and supplies for the month was $2,440. Find the spending variance for materials and supplies in November

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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