Idiosyncratic risk of the stock, Financial Accounting

Assignment Help:

(a)   The market considers Intel Corp (INTC) of all these stocks to be the riskiest since it has the highest beta of 1.497408. No, this measure of risk does not include the idiosyncratic risk of the stock. The idiosyncratic error will be included in the ε item in the market model of each stock.

(b)  Intel Corp (INTC) had price changes that were least closely related to the market, because it has the highest beta and hence more variation from the returns of S&P.

(c)   Apple (AAPL) has the highest expected returns. The average monthly return for this stock is 0.0234130, which is the highest of all stocks and this occurs even when the index returns are zero or flat.

(d)  With the given information and the given equation,

Expected return of HD = 0.0195538 + 1.089703*10% = 0.128524 = 12.8524%

Thus the expected return of HD is 12.8524% for the next month, with the given predictions (ignoring error term).

 


Related Discussions:- Idiosyncratic risk of the stock

Identify the depreciation methods, Identify the Depreciation Methods O...

Identify the Depreciation Methods On January 3, 2005, XYZ Distribution Co. paid $224,000 for a computer system. In addition to the basic purchase price, the company paid a set

Prepare a statement of partnership liquidation, After discontinuing the ord...

After discontinuing the ordinary business operations and closing the accounts on May 7, the ledger of the partnership indicate the following: Cash $75,000 Non cash 105,000 Liabilit

Assignment, Can you do the attacched quections by Monday?

Can you do the attacched quections by Monday?

Distribution under the intestacy provisions, DISTRIBUTION UNDER THE INTESTA...

DISTRIBUTION UNDER THE INTESTACY PROVISIONS When a person dies without leaving a will, his estate is distributed according to the Law of Succession Act. When a person dies, fou

What is financial risk when company experiencing changes, Financial risk is...

Financial risk is the likelihood of a company experiencing changes in the level of its distributable earnings as a result of the need to make interest payments on debt finance or p

Show that a price is not an equilibrium price for asset, 1. Suppose that th...

1. Suppose that the one-period rate is 4% and that the two-period rate is 6%. What sort of expectation for the one-period rate next period makes this situation an equilibrium? 2

Prepare journal entries to record liquidation transaction, The following t...

The following transactions transpire during the liquidation of the Marks, Norris, Smith, and Savannah partnership: • Collected 90 percent of the total accounts receivable with the

Department accounting, In the spring of each year, Steinbrook College's the...

In the spring of each year, Steinbrook College's theater department puts on a contemporary play. Before the performance, the theater manager instructs student volunteers in their d

Account receivable, what is the treatment of increase in allowance receivab...

what is the treatment of increase in allowance receivable.

Application information-executorship law and accounts, Application Informat...

Application Information The application must include information as to: The full name of the deceased; The death and place of his death; Whether or not the decease

Write Your Message!

Captcha
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