Risky asset could have a beta of zero

Assignment Help Financial Management
Reference no: EM131568875

Beta and CAPM

Is it possible that a risky asset could have a beta of zero? Explain. Based on the CAPM, what is the expected return on such an asset? Is it possible that a risky asset could have a negative beta? What does the CAPM predict about the expected return on such an asset? Can you give an explanation for your answer?

Reference no: EM131568875

Questions Cloud

Journal entries for the transactions : Question - James Corporation's balance sheet at December 31, 2014, is presented below. Journal entries for the transactions listed above and adjusting entries
Estimate of the cost of 1-year call option : Estimate of the cost of 1-year call option a share of AMZN, assuming a strike price of X=$980.
Briefly discuss the general shape of your yield curve : Briefly discuss the general shape of your yield curve. What conclusions might you draw about future interest rate movements from this yield curve?
Complete values for aqueous solutions : Complete this table of values for four aqueous solutions at 25°C.
Risky asset could have a beta of zero : Is it possible that a risky asset could have a beta of zero? Explain. Based on the CAPM, what is the expected return on such an asset?
Write the converse of the statement in each case : Each of the following statements is true. In each case write the converse of the statement, and give a counterexample showing that the converse is false.
Contrast the auditors liability under : Contrast the auditors' liability under the Securities Act of 1933 with that under the Securities Exchange Act of 1934?
Standard deviation of returns on well-diversified portfolio : What is the standard deviation of returns on a well-diversified portfolio with a beta of 1.3?
Evaluate my essay on a rose for emily : Evaluate my essay on A Rose for Emily

Reviews

Write a Review

Financial Management Questions & Answers

  Begin saving for retirement

You will begin saving for retirement in a 401k account earning 9.93% with annual contributions of $8,500 for 35yrs. At that time, if you leave the money in the account and hope to live off of the annual payments for an additional 25yrs, what is the p..

  About the issued bonds rate

Diesel company issued bonds with 12% coupon rate, semiannual coupon, $1,000 par value. Bonds mature in 40 years and are callable 5 years from now at $1120. Bonds are sold today at a price of $1300, and the yield curve is ownward sloping. What type of..

  Calculate the required monthly payments to pay off the loan

calculate the required monthly payments to pay off the loan.

  The large increase in bank reserves at the fed

Is there a connection between the Fed's balance sheet having doubled and the large increase in bank reserves at the Fed? Briefly explain.

  Calculate the projects NPV-IRR-MIRR and Payback

Madison manufacturing is considering a new machine that costs $350,000 and would reduce pre tax manufacturing costs by $110,000 annually. Madison would use the 3 year MACRS method to depreciate the machine, and management thinks the machine would hav..

  Share stock price be immediately after the repurchase

The following data apply to Johnny’s Electrical Equipment: Value of operations $20B Short-term investments $ 1B Debt $ 6B Number of shares 300M The company plans on distributing $50 million by repurchasing stock. What will the intrinsic per share sto..

  Spot rate to forecast the future spot rate of the euro

Determine the NPV if Cantoon uses the forward rate instead of the spot rate to forecast the future spot rate of the euro,

  Statement of the authors hypothesis or proposition

The Opinion and Analysis section should demonstrate your critical thinking and analysis of the subject matter - Relevance to Corporate Valuation section should offer an insight-building summary, recommendations, findings and conclusions.

  Considering the purchase of some new machinery

The Pre-Tech Company is currently considering the purchase of some new machinery. The machinery will have a useful life-time of 9 years and will cost $ 600,000 to be paid in the current period. The appropriate discount rate for this project is 16%. I..

  The profit-loss expected on the candy maker hedge

Suppose a candy maker anticipates buying 112,000 pounds of sugar on September 30, 2016. Please show the profit/(loss) expected on the candy maker’s hedge?

  Common stock-bonds make semiannual payments

Consider the following information for Evenflow Power Co., Debt: 5,000 5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 105 percent of par; the bonds make semiannual payments. Common stock: 120,000 shares outsta..

  New seven-octave voice emulation implant

Project Evaluation [LO1] Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 1 73,000 2 86,000 3 100,000 4 95,000 5 76,000 Production of the implants will require $1,520,000 in ne..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd