Capm predicted expected return for yahoo

Assignment Help Finance Basics
Reference no: EM132955749

Suppose the expected market return is 14%, the volatility of the market return is 0.25, the risk-free rate is 4%, and the beta of Yahoo is 1.3. Which of the following is true?

A. The CAPM predicted expected return for Yahoo is 17%

B. According to CAPM, portfolios that combine the market portfolio and Yahoo stock can reach a Sharpe Ratio of 0.56 due to diversification.

C. The optimal risky portfolio according to CAPM has a Sharpe Ratio of 0.4

D. The volatility of Yahoo stock's return is 0.325

E. The Sharpe Ratio for investing 100% of the portfolio in Yahoo stock is 0.52

Reference no: EM132955749

Questions Cloud

Compute the eay of a semi-annual coupon bond : How do you compute the EAY of a semi-annual coupon bond?
Analyst assessment of betas : According to your favorite security analyst (who is very good at estimating betas, expected returns, and standard deviations):
What contribution margin per pound of raw material : What contribution margin per pound of raw material is earned by each of the two products and What the contribution margin per pound? alpha
Range of prices of the underlying asset : A trader sells a strangle by selling a put option with a strike price of K1 = $40 for P=$4. and selling a call option with a strike price of K2 = $50 for C=$3.
Capm predicted expected return for yahoo : Suppose the expected market return is 14%, the volatility of the market return is 0.25, the risk-free rate is 4%, and the beta of Yahoo is 1.3.
Evaluating project with net cash flows and probabilities : Heywood Diagnostic Enterprises is evaluating a project with the following net cash flows and probabilities (Prob.):
Receiving corporation taxable income : The cost of preferred stock to a firm must be adjusted to an after-tax figure because 70% of dividends received by a corporation may be excluded from the receiv
What is the value of company x stock : Q#1: How much should you pay for a share of stock that offers a constant growth rate of 10%, requires a 16% rate of return, and is expected to sell for $48.03 o
How are techniques applied in finance : Your 13-year old cousin comes to you again to ask more questions about the time value of money (TVM): "Hey cousin, I want to learn about annuities, growing annu

Reviews

Write a Review

Finance Basics Questions & Answers

  Overall management of the firm

What is the role of financial planning in the overall management of the firm? Be specific!

  Fair value of given annuity

You've a chance to buy an annuity that pays $5,000 at the beginning of each year for 5 years. What is the most you should pay for the annuity?

  How may a seller speed up collection of accounts receivable

How may a seller speed up the collection of accounts receivable? Give examples that may apply to various stages in the life cycle of receivables.

  What is the current yield today

In November 2016 (just after that year's coupon had been paid) you bought the bond at a price of £96.76. It is now exactly one year later and you have just sold

  Difference between economic failure and financial distress

What is the difference between economic failure and financial distress? Which situation is likely to lead to liquidation, and which is likely to result in reorganization?

  What is the coefficient of variation on the companys stock

ABC Corp believes the following probability distribution exists for its stock. What is the coefficient of variation on the company's stock?

  What coupon rate should be set on the bonds-with-warrants

What coupon rate should be set on the bonds-with-warrants so that the package would sell for $1,000?

  What is the future value of your total lottery payments

Suppose that you invest the $50,000 winnings that you receive today and earn 8% annually for the next 5 years. What is the future value of your total lottery payments?

  Discuss this viewpoint should the farmer estimate his or

a corn farmer argues i do not use futures contracts for hedging. my real risk is not the price of corn. it is that my

  Calculate marginal tax rate and taxable income

Salary $22,000.00 Corporate Bonds $2,000.00 Muni Bonds $10,000.00 Ordinary Dividends $3,000.00 Qualified Dividends $3,000.00 ST Capital Gain $150.00 LT Capital Loss $1,500.00 Independent Contractor Net Income $17,500.00.

  What is the change of bond price

If central bank decrease interest rate by 0.25%, what is the change of bond price by using duration and convexity estimation?

  Size of each of the 24 semi-annual deposits

To pay back a debt due in 12 years, Flinstone Inc. will be making deposits into a separate investment account (a sinking fund)

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