Determine the expected return on the market

Reference no: EM1350698

1. A stock has an expected return of 13 percent, its beta is 0.55, and the risk-free rate is 7.15 percent. What must the expected return on the market be?

2. You own a portfolio equally invested in a risk free asset and two stocks. If one of the stocks has a beta of 1 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

3. A stock has an expected return of 11 percent, its beta is 1.3, and the expected return on the market is 9 percent. What must the risk-free rate be? (Do not round your intermediate calculations.)

4. A stock has a beta of 1.15, the expected return on the market is 10 percent, and the risk-free rate is 3.5 percent. What must the expected return on this stock be?

5. A portfolio is invested 15 percent in Stock G, 60 percent in Stock J, and 25 percent in Stock K. The expected returns on these stocks are 8 percent, 20 percent, and 28 percent, respectively. What is the portfolio's expected return?

6. A portfolio has 60 shares of Stock A that sell for $48 per share and 120 shares of Stock B that sell for $25 per share.
(a) What is the portfolio weight of Stock A?
(b) What is the portfolio weight of Stock B?

7. You own a stock portfolio invested 25 percent in Stock Q, 20 percent in Stock R, 15 percent in Stock S, and 40 percent in Stock T. The betas for these four stocks are 1.8, 1.36, 1.54, and 0.79, respectively. What is the portfolio beta?

8.State of Economy Probability of State of Economy Rate of Return if State occurs
Recession 0.11 -0.01
Normal 0.35 0.14
Boom 0.54 0.32

Calculate the expected return?

9. You have $40,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 16 percent and Stock Y with an expected return of 6 percent.

(a) If your goal is to create a portfolio with an expected return of 10.5 percent, how much money will you invest in Stock X?

(b) If your goal is to create a portfolio with an expected return of 10.5 percent, how much money will you invest in Stock Y?

Reference no: EM1350698

Questions Cloud

Dealing with addiction in the workplace : How should we address this situation with the assistant director - Dealing with Addiction in the Workplace

Program that will help user with metric conversions : Write a program that will help the user with metric conversions. Your program should allow the user to specify the names of the units as strings (e.g., centimeters, liters, grams, for the metric system and inches).

Describe the impact of rational self-interest on each : What happens to the money supply, interest rates, investment spending and GDP. Describe the impact of rational self-interest on each.

How evolutionary and personal history affect behavior : How does evolutionary history and personal history affect behavior? Provide an example. What is emotion? In what types of social settings might an individual observe the following emotions

Determine the expected return on the market : A stock has an expected return of 13%, its beta is .55, and the risk-free rate is 7.15%. Determine the expected return on the market?

What is the velocity of the water wave : A space traveler weighs 130 pounds on earth. What would the traveler weigh on another planet whose radius is three times that of earth and whose mass is twice that of earth.

What adverse effects on domestic economy may follow : What adverse effects on the domestic economy may follow from (a) a depreciation of the exchange rate and (b) an appreciation of the exchange rate.

Tyco financial scandal : Discuss how internal control problems may have contributed to the failure of Tyco International. Describe these problems and their cause. What would you have done differently, if you had been in charge (be specific)?

Program read weight of package of breakfast cereal in ounces : Write a program which will read the weight of package of a breakfast cereal in ounces and output weight in metric tons as well as number of boxes

User Account

All Pages