User Account

All Pages

Which stock has the most systematic risk

Assignment Help Finance Basics
Reference no: EM131126406

Consider the following information on Stocks I and II:

2176_o.jpg

The market risk premium is 8 percent, and the risk-free rate is 5 percent. Which stock has the most systematic risk?

Which one has the most unsystematic risk? Which stock is "riskier"?Explain.

Reference no: EM131126406

Questions Cloud

Calculate the required return for each stock is each stock : Wilson's own forecasts of the returns on the two stocks are 13.25 percent for Furhman Labs and 11.25 percent for Garten. Calculate the required return for each stock. Is each stock undervalued, fairly valued, or overvalued?
Decompose the stock return into the systematic return : The beta for a certain stock is 1.15, the risk-free rate is 5 percent, and the expected return on the market is 13 percent. Complete the following table to decompose the stock's return into the systematic return and the unsystematicreturn.
Which stock has the most systematic risk : The market risk premium is 8 percent, and the risk-free rate is 5 percent. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which stock is "riskier"?Explain.
How much money will you invest in stock y : If X has an expected return of 31 percent and a beta of 1.8, Y has an expected return of 20 percent and a beta of 1.3, and the risk-free rate is 7 percent, how much money will you invest in Stock Y? How do you interpret your answer?
Use this information to calculate the security beta : Fill in the following table, supplying all the missing information. Use this information to calculate the security'sbeta.
Calculate beta is to take the covariance : Show that another way to calculate beta is to take the covariance between the security and the market and divide by the variance of the market’s return.
What is the expected return on the market : Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-freerate?

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the present value of the three contract proposals

Calculate the present value of the three contract proposals offered by the U.S. team. Factor in any probability considerations where appropriate.

  Suppose 1-year t-bills currently yield 700 and the future

suppose 1-year t-bills currently yield 7.00 and the future inflation rate is expected to be constant at 3.20 per year.

  Equity great corp has 108000 shares of common stock

debt one thousand bonds were issued five years ago at a coupon rate of 11. they had 20-year terms and 1000 face values.

  Treasury note prices and the decline in treasury note yields

1. You want to invest in five-year U.S. Treasury notes. Unfortunately, you believe that yields will decline and prices will rise for five-year Treasury notes. Review futures in Treasury notes and set up a strategy so you can benefit from the rise in ..

  Set up the proforma money related proclamations

Set up the proforma money related proclamations for the year 2008 utilizing the exceed expectations model given as a part of the content.

  Period of growing competition

The industry of mobile phones is experiencing a period of growing competition that erodes the profit margin and that is killing many competitors. In the last five years the field has become an oligopolistic market with room for a very limited numb..

  What annual rate of return would she have earned

Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

  Portfolio diversification stocks offer an expected rate

Portfolio Diversification Stocks offer an expected rate of return of 10% with a standard deviation of 20%, whereas gold offers an expected return of 5% with a standard deviation of 25%.

  Assumptions in budget items to avoid overlooking

"Variance Analysis" propose at least two actions a budget analyst can take to avoid assumptions in budget items to avoid overlooking favorable or adverse line items in the budget. Provide examples to justify your response.

  Large downpayment on the purchase of a house

Statement I: When a Bank requires a Borrower to pay a large downpayment on the purchase of a house, the Bank is reducing its risk by increasing the equity cushion to support any losses in value to the collateral.

  Use the afn equation to forecast baxter additional funds

The aftertax profit margin is forecasted to be 7%, and the forecasted payout ratio is 75%. Use the AFN equation to forecast Baxter's additional funds needed for the coming year.

  What will occur to margin account of investor who holds one

the margin requirement on the samppasx 200 futures contract is 10 and the stock index is currently 4400. each contract

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd