Negative expected return, Assume rf is 5% and rm is 10%.

Negative expected return

Reference no: EM1390743

Part 1) Assume rf is 5% and rm is 10%. According to the SML and CAPM, an asset with a beta of -2.0 has a required return of negative 5%[=5-2(10-5)]. Can this be possoble?

Part 2) Does this mean that the asset has negative risk? Why would anyone ever invest in an that has an expected and required return that is negative? Explain in detail.

Reference no: EM1390743

Questions Cloud

Stocks-risk and expected returns : Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 18% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2.

Explain how would you draw up a telecommuting contract : explain how would you draw up a telecommuting contract with a new employee? Comprise considerations such as job description, compensation also benefits, performance measures, training also grounds for dismissal.

Describe how you can use systems theory : Describe how you can use systems theory in problem solving or planning, by example, in a work setting, at home, or any situation when you would have to do problem-solving or planning.

Is the idea of a mommy track a good one : Do you think there already is such a thing as a mommy track? Is the idea of a mommy track a good one? Is it somehow discriminatory against women?

Negative expected return : Assume rf is 5% and rm is 10%. According to the SML and CAPM, an asset with a beta of -2.0 has a required return of negative 5%[=5-2(10-5)]. Can this be possoble?

Experimental study of the effects of exercise on stress : In an experimental study of the effects of exercise on stress, participants are randomly assigned to either the no exercise or the exercise conditions. Identify what type of study this is-between-, within-, or matched-participants. In addition, id..

Described the conflict among eisner also jobs : Think back to the stages of conflict descried in this chapter. Which stage best described the conflict among Eisner also Jobs? Was it perceived, felt, or manifest?

Explain how the following somewhat match each other : Explain how the following somewhat match each other: • functional structure with simple structure • divisional structure with departmentalization by product

Creating genetic map including time distance : Three Hfr strains of E. coli are known to transfer their genetic material during conjugation in different sequences. Given the time of entry of the markers into the F- recipient,

User Account

All Pages