Expected return on two stocks for particular market returns

Assignment Help Financial Management

Reference no: EM131886626

Consider the following table, which gives a security analyst's expected return on two stocks for two particular market returns:

Market Return

Aggressive Stock

3.0%

Defensive Stock

4.8%

a. What are the betas of the two stocks? (Round your answers to 2 decimal places.)

Beta A = _______________

Beta D=________________

b. What is the expected rate of return on each stock if the market return is equally likely to be 8% or 20%? (Round your answers to 2 decimal places.)

Return of Beta A = _________%

Return of Beta D = _________%

c. If the T-bill rate is 7%, and the market return is equally likely to be 8% or 20%, what are the alphas of the two stocks? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Alpha A = ______________%

Alpha D = ______________%

Reference no: EM131886626

Questions Cloud

How many months will he have remaining on his mortgage : What will be his monthly payments? How many months will he have remaining on his mortgage?

What should be price of the company stock : what should be the price of the company's stock today (December 31, 2013)?

Determine the number of bonds needed to pay at year : Calculate the duration. Determine the number of Bonds needed to pay at year 9 the amount of $1,000,000 for each bond.

Explain the implications of the act : Identify the Congressional Act that repealed the restriction on banks affiliating with securities firms and explain the implications of the Act.

Expected return on two stocks for particular market returns : which gives a security analyst's expected return on two stocks for two particular market returns: What are the betas of the two stocks?

Benefits of using the dupont analysis method : What are the benefits of using the DuPont Analysis method?

Making use of this type of funding policy exception : The program office is most likely making use of this type of funding policy exception:

Calculate the stock standard deviation : Calculate the stock's standard deviation.

What is the bond value if required rate of return increase : If the required rate of return is 3.50%, what is the value of the bond? What is the bond’s value if the required rate of return increases to 5.65%?

User Account

All Pages