Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A stock with a beta of 1.5 has an expected
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- Calculate the Beta of a stock that has annual returns of 18%, -10%, 16%, while the market (X-variable) has corresponding annual returns of 20%, -5%, 10% during each of these three years. (Hint: Your calculator should generate an average value of 8% for the stock = Y, if not re-check your data register).arrow_forwardIf the expected return on the market is 9.38 percent, the inflation rate is 0.63 percent, the risk - free rate is 2.95 percent, and Big Madden common stock has a beta of 1.06, then what is the expected return for Big Madden stock?arrow_forwardDotbomb’s stock has the following projected rates of return (outcomes): 10%, 15%,and 30%. The probabilities of their outcomes are 15%, 50%, and 35% respectively. a.What are the expected return and standard deviation of Dotbomb’s stock?b. What is the probability that Dotbomb stock will earn a return no more than 15%?c. What is the probability that Dotbomb stock will earn a return less than 15%arrow_forward
- A stock has an expected return of 13 percent and a beta of .8, and the expected return on the market is 15 percent. What must the risk-free rate be? 7.0% 8.0% 5.0% 6.0%arrow_forwardA stock with a beta of 1.2 has an expected rate of return of 16%. If the market return this year turns out to be 10 percentage points below expectations, what is your best guess as to the rate of return on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) Stock return %arrow_forwardA stock has a beta of 1.2, the expected return on the market is 9 percent, and the risk-free rate is 3 percent. What must be the expected return on this stock? 10.2% 9.55% O 16.5% O 14.32%arrow_forward
- A stock with a beta of 1.1 has an expected rate of return of 16%. If the market return this year turns out to be 10 percentage points below expectations, what is your best guess as to the rate of return on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) Stock return %arrow_forwardThe risk-free rate is 4% and the expected market return is 10%. A stock with a beta of 0.9 is currently priced at $40 and will pay $1.40 dividend one year later. If then the stock will be priced at $42, is the stock underpriced or overpriced?arrow_forward
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