A pension fund currently invests in five different stocks as follows: Stock A B C D E Invested Amount $2 mil $3 mil $2 mil $2 mil $1 mil beta 1.7 Expected Return 7% 15.5% 4.5% 12% 14.5% It is assumed that the CAPM holds, and the market is in equilibrium. The beta of the portfolio is 0.76. Fill in the blanks.

Which one of the following stocks is correctly priced if the risk-free rate of return is 3.0 percent and the market risk premium is 7.5 percent? Expected Return 8.46% Stock A B с D E 0000С Stock A O Stock D Stock C O Stock E Beta 77 1.46 1.27 1.44 .95 Stock B 12.47 11.19 13.80 8.65

An investor plans to invest funds in the following stocks: Stock Beta Amount Invested A 1.39 $1,939.00 B 1.21 $2,818.00 C 0.75 $1,378.00   The risk-free rate is currently 3.00%, while the market risk premium is 6.00%. What is the beta of this portfolio?

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Asset W has an expected return of 8.8 percent and a beta of .90. If the risk-free rate is 2.6 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Do not round intermediate calculations. Enter your expected returns as a percent rounded to 2 decimal places, e.g., 32.16, and your beta answers to 3 decimal places, e.g., 32.161.) Portfolio Expected Percentage of Portfolio in Asset W Portfolio Return Beta 0 % 2.60 % 25 4.15 % 0.225 50 5.70 % 0.450 75 7.25 % 0.680 100 8.80 % 0.900 125 10.35 % 1.130 150 11.90 % 1.350 If you plot the relationship between portfolio expected return and portfolio beta, what is the slope of the line that results? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Slope of the line

Suppose that there are many stocks in the security market and that the characteristics of stocks A and B are given as follows: Stock Expected Return Standard DeviationA 10% 5%B 15% 10%Correlation = -1 Suppose that it is possible to borrow at the risk-free rate, rf. What must be the value of the risk-free rate? a. The weight of Stock A in the portfolio: Blank 1. Fill in the blank, read surrounding text. b. The weight of Stock B in the portfolio: Blank 2. Fill in the blank, read surrounding text.c. The Expected rate of return of the portfolio: Blank 3. Fill in the blank, read surrounding text.d. The risk-free rate is: Blank 4. Fill in the blank, read surrounding text.

Using the CAPM, estimate the appropriate required rate of return for the three stocks listed here, given that the risk-free rate is 6 percent and the expected return for the market is 14 percent. STOCK ВЕТА A 0.62 B 1.09 1.48 a. Using the CAPM, the required rate of return for stock A is %. (Round to two decimal places.) b. Using the CAPM, the required rate of return for stock B is %. (Round to two decimal places.) c. Using the CAPM, the required rate of return for stock C is %. (Round to two decimal places

Assume that the risk-free rate is 2.5% and the market risk premium is 8%. What is the required return for the overall stock market? Round your answer to one decimal place.  ? % What is the required rate of return on a stock with a beta of 0.5? Round your answer to one decimal place. ?  %     The above is a two part question, therefore the second answer is determined based off the first answer provided. Please, please, please do provide both answers.

Assume the expected return on the market is 7 percent and the risk-free rate is 4 percent. a. What is the expected return for a stock with a beta equal to 1.10? (Enter your answers in decimals. Do not enter percent values.) b. What is the market risk premium? (Enter your answers in decimals. Do not enter percent values.)

Suppose we have the following information:   Securit Amount Invested Expected Return Beta Stock   A RM1 ,OOO 8% 0.80   Stock B RM2,OOO 12% 0.95   Stock C RM3,OOO 15% 1.10   Stock D RM4,OOO 18%   a) Compute the expected return on this portfolio.    b) Calculate the beta of the portfolio.    c) Does this portfolio have more or less systematic risk than an average asset? Explain.