The economy and the returns in each scenario

Assignment Help Management Theories

Reference no: EM131039738

Consider the following two scenarios for the economy and the returns in each scenario for the market portfolio, an aggressive stock A, and a defensive stock D. Rate of Return Scenario Market Aggressive Stock A Defensive Stock D Bust -9% -10% -7% Boom 43 50 13 a. Find the beta of each stock. (Round your answers to 2 decimal places.) Beta Stock A Stock D b. If each scenario is equally likely, find the expected rate of return on the market portfolio and on each stock.

(Round your answers to 2 decimal places.) Expected Rate of Return Market portfolio % Stock A % Stock D % c. If the T-bill rate is 3%, what does the CAPM say about the fair expected rate of return on the two stocks? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected Rate of Return Stock A % Stock D % d. Which stock seems to be a better buy on the basis of your answers to (a) through (c)? Stock A Stock D

Reference no: EM131039738

Questions Cloud

Features of a push button beverage pouring system : 1) Discuss the features of a push button beverage pouring system, enumerating the positive features for the operator and listing disadvantages.

Why is a ceo contract important : Why is a CEO contract important? If you were the CEO, which features would you want to include in your contract and which would you prefer to remove? If you represented the Board and the organization, which features would you want to include and whic..

Case study-perdue farms and others : What are the key factors that determine the success or failure of supply chain during the holiday season? Which of these are or could be under the control of companies, and which are inherent in the end consumer business? Provide several examples.

Following willnot affect the quick ratio : 1. Other things held constant, which of the following willnot affect the quick ratio? (Assume that current assets equal current liabilities.)

The economy and the returns in each scenario : Consider the following two scenarios for the economy and the returns in each scenario for the market portfolio, an aggressive stock A, and a defensive stock D. Rate of Return Scenario Market Aggressive Stock A Defensive Stock D Bust -9% -10% -7% B..

List stakeholders that may play a role in your development : Is there a Certificate of Need (CON) program for your state? If so, explain the program. If there is not a CON for your state, was there one in the past and when was it eliminated?

Effective performance management : ________________________means effective performance management helps the organization achieve its business objectives. It does this by helping to link employees behavior with the organizations goals.

Difference between international businesses : What is the main difference between international businesses in terms of their approaches to international labor relations?

Find healthcare organization-describe the challenges : Research and find a healthcare organization (or one you are familiar with) and imagine you are a board member needing to replace the CEO. What would you look for in a new CEO to specifically solve the organization’s challenges? Describe the challenge..

User Account

All Pages