Solution-Estimate the beta for x and y

Estimate the beta for x and y

Assignment Help Finance Basics

Reference no: EM133122657

You are a portfolio manager at Collins Asset Management. Your research department has developed the information shown in the following table.

	Estimated expected return	Standard deviation	Correlation with market portfolio
Stock X	8.8%	18.46%	0.3
Stock Y	6.3%	11.75%	0.7
Market index	8.5%	13%	1
T-bills	3%	0	0

Estimate the beta for X and Y.
If the CAPM holds true for both X and Y, what are their required returns?
Identify and justify which stock (stock X or Y) would be more appropriate for an investor who wants to add the stock to a well-diversified equity portfolio.
Estimate the required rate of return for a portfolio formed with 70% of wealth invested in X and 30% invested in Y, and determine if it is undervalued or overvalued.
If you want to hold stock X or Y as a single-stock portfolio, which one should you choose?

Reference no: EM133122657

Questions Cloud

Explain the type of bankruptcy filed : Explain the type of bankruptcy filed, the reason filed, the result of the case, and the final outcome of the team (still same ownership, sold, etc.).

Compute both direct labour cost and direct materials cost : Compute both direct labour cost and direct materials cost assigned to (a) units completed and transferred out, and (b) ending goods in process inventory

What is the present value of all future earnings : What is the present value of all future earnings if the interest rate is 8%? (Assume all cash flows occur at the end of the year.)

State requires to incorporate business : can you tell me specifically what your state requires to incorporate a business in that state? Provide a link to the state information.

Estimate the beta for x and y : You are a portfolio manager at Collins Asset Management. Your research department has developed the information shown in the following table.

Evaluate the impact that covid-19 had on university life : Investigate how levels of student satisfaction differed amongst university students during the academic year of 2020/2021

What is the required return for stock a : Stock A has just paid a dividend of $2.35 per share. Dividends are expected to grow to constant rate of 3% per year forever. What is required return for Stock A

Perform a sensitivity analysis : Perform a sensitivity analysis that shows the effects of these two factors on the maximum loan requirement.

Estimate total costs at that level of activity : Your boss thinks demand is going to increase to 2,200 cups per week and has asked you to estimate total costs at that level of activity

User Account

All Pages

Estimate the beta for x and y

Reference no: EM133122657

Reference no: EM133122657

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT