What is asset beta, Asset A has an expected return of 11%,

What is asset beta

Assignment Help Financial Management

Reference no: EM132053006

1. You have $100,000 invested. Of that, $60,000 is invested in CWS stock which has a beta of 1.2, $30,000 is invested in PSK stock with a beta of 0.9, and the remainder is invested in T-Bills. Which of the following is true?

A) CWS stock is considered more sensitive to market changes than PSK is.

B) You have 20% of your portfolio invested in T-Bills.

C) Your portfolio has no systematic risk since it has T-Bills in it.

D) Your portfolio’s overall beta is 1.06.

2. Asset A has an expected return of 11%, i.e., E(RA)=11%. The market premium is expected to be 8%. If the risk-free rate (Rf) is 5%, what is asset A's beta? Hint: E(RA) = Rf + [E(RM)–Rf].bA

A) 1.04

B) 0.88

C) 0.75

D) 0.62

Reference no: EM132053006

Questions Cloud

Calculate firm weighted average cost of capital : Calculate the firm's weighted average cost of capital (WACC). Market value of common stock=$60 million; market value of preferred stock=$10 million,

True regarding financial leverage : Which of the following is true regarding financial leverage?

Estimate of the maximum share price for purchase : What is your new estimate of the maximum share price for the purchase?

Three products beyond the split-off point : What is the financial advantage (disadvantage) of further processing each of the three products beyond the split-off point?

What is asset beta : Asset A has an expected return of 11%, i.e., E(RA)=11%. The market premium is expected to be 8%. If the risk-free rate (Rf) is 5%, what is asset A's beta?

Assets likely has the lowest level of risk : Which of the following assets likely has the lowest level of risk (therefore the lowest expected return)?

Statements regarding the efficient market hypothesis : Which of the following statements regarding the efficient market hypothesis (EMH) is incorrect?

Regarding the risk-and-return discussion : Regarding the risk-and-return discussion, find the incorrect statement below.

What will be the taxes due on sale : Assume a property is purchased for $1,000,000 and sold at the end of five years for a price of $1,270,000. What will be the taxes due on sale?

User Account

All Pages