Higher beta stocks are expected to have a lower return rate

Assignment Help Financial Management

Reference no: EM131013195

True or false:

A stock that is more volatile than the market will have a Beta of more than 1.0

Stock As beta is 1.0 this means the stock moves in the same direction and magnitude as the market

Higher beta stocks are expected to have a lower return rate

Reference no: EM131013195

Questions Cloud

Computer-based order entry system : Your firm is contemplating the purchase of a new $540,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $52,000 at the end of that time. You will save $300,000 before..

Calculate the annual equivalent payments : Please Calculate the annual equivalent payments (end of the year, 1 to 4) for the investment over the 4 year life with nominal 15% interest rate compounded annually. With 1500 dollars investment at present time, income of 600, 500, 400, and 300 dolla..

About the two-asset portfolio : Stock A has an expected return of 13% and a standard deviation of 35%. Stock B has an expected return of 19% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2. What is the expected return of a portfolio invest..

Defense stocks are to be combined into a stock index : The following three defense stocks are to be combined into a stock index in January 2013 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance): Suppose that Douglas McDonnell shareholders approve ..

Higher beta stocks are expected to have a lower return rate : A stock that is more volatile than the market will have a Beta of more than 1.0. Stock As beta is 1.0 this means the stock moves in the same direction and magnitude as the market. Higher beta stocks are expected to have a lower return rate.

Project generates sales-what are effects on cash flow : A project currently generates sales of $1 million, variable costs equal 40% of sales, and fixed costs are $.2 million. The firm’s tax rate is 30%. Assume all sales and expenses are cash items. What are the effects on cash flow, if sales increase from..

Investment club has only two stocks in its portfolio : Portfolio Beta Your investment club has only two stocks in its portfolio; $50,000 is invested in a stock with a beta of 0.8, and $70,000 is invested in a stock with a beta of 2.3. What is the portfolio's beta?

What are the fixed costs of hamburger production : In a slow year, Deutsche Burgers will produce 3.5 million hamburgers at a total cost of $4.6 million. In a good year, it can produce 4.3 million hamburgers at a total cost of $4.9 million. What are the fixed costs of hamburger production? What is the..

Time value project : You have $350.00 per month to spend on a car payment. If your credit union charged 7.5% interest on a used car, how much car can you purchase if you will only finance for 4 years? How much would you pay for this business today assuming you needed a 1..

User Account

All Pages