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.

Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, rƒ. The characteristics of two of the stocks are as follows:   Stock Expected Return Standard Deviation A   11 %   35 % B   20 %   65 % Correlation = –1               a. Calculate the expected rate of return on this risk-free portfolio? (Hint: Can a particular stock portfolio be substituted for the risk-free asset?) (Round your answer to 2 decimal places.)   b. Could the equilibrium rƒ be greater than 14.15%?multiple choice Yes No

A $33,622 portfolio is invested in a risk-free security and two stocks. The beta of Stock A is 2.1 while the beta of Stock B is 0.84. One-half of the portfolio is invested in the risk-free security. How much (in $) is invested in Stock A if the beta of the portfolio is 0.56? Answer to two decimals

As an equity analyst, you have developed the following return forecasts and risk estimates for two different stock mutual funds (Fund T and Fund U}:   Forecasted Return CAPM Beta Fund T 9.00% 1.20 Fund U 10.00% 0.80 a. If the risk-free rate is 3.9 percent and the expected market risk premium (£(RM) -RFR} is 6.1 percent, calculate the expected return for each mutual fund according to the CAPM.  b. Using the estimated expected returns from part (a) along with your own return fore­casts, demonstrate whether Fund T and Fund U are currently priced to fall directly on the security market line (SML), above the SML, or below the SML. c. According to your analysis, are Funds T and U overvalued, undervalued, or properly valued?

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?

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.)