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- Fremont Enterprises has an expected return of 16% and Laurelhurst News has an expected return of 24%. If you put 60% of your portfolio in Laurelhurst and 40% in Fremont, what is the expected return of your portfolio? (Round to 2 decimal places)if you were to invest 40% in A and 60% in B, what would be the expected return of your portfolio? Enter return in decimal form, rounded to 4th digit, as in "0.1234"Fremont Enterprises has an expected retun of 15% and Laurelhurst News has an expected return of 20% you put 70% of your portfolio in Laurelhurst and 30% in Fremont, what is the expected return of your portfolio? The expected return on the portfolio is% (Rounded to two decimal places.) Insert Backspace Delete Enter K L. F G Shift Ctri Alt
- You have assigned the following values to these three firms: Upcoming Dividend $0.50 Estee Lauder Kimco Realty Nordstrom Price $36.00 75.00 11.00 1.58 2.00 Estee Lauder required return Kimco Realty required return Nordstrom required return Assume that the market portfolio will earn 17.20 percent and the risk-free rate is 8.20 percent. Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your final answers to 2 decimal places.) CAPM Growth 11.40% 17.00 8.80 % % % Beta 0.92 1.28 1.24 Constant-Growth Model % % %Indicate whether the following statements are true or false (circle one). Use 1 or 2 sentences to discuss why it is so. (a) If R, is simple 1-month return, then the annualized return is 12 x R, after assuming all R = R. True False Why? (b) Let and r GSA be continuously compounded 1 - month returns for Goldman Sachs Group (GS) and American International Group (AIG). If we construct a portfolio using the share ain[0, 1] for GS, the portfolio cc return is ľ AIG = 0x*y +(1-x)*r True False Why? (c) In 5. (b)., if 5% quantile of the portfolio cc return is given as AIG, GS, r 40.05 = -0.5, then 5% monthly Value-at-Risk for the $10,000 investment in this portfolio is $10,000 × (-0.5) = -$ 5,000. True False rThe current risk-free rate of return, rRF, is 4 percent and the market risk premium, RPM, is 8 percent. If the beta coefficient associated with a firm's stock is 1.6, what should be the stock's required rate of return? Round your answer to one decimal place. ´%
- Suppose rRF = 5%, rM = 10%, and rA = 11%. Calculate Stock A's beta. Round your answer to one decimal place. If Stock A's beta were 1.8, then what would be A's new required rate of return? Round your answer to one decimal place. %Year-to-date, Yum Brands had earned a 4.80 percent return. During the same time period, Raytheon earned 5.13 percent and Coca-Cola earned −0.64 percent.If you have a portfolio made up of 40 percent Yum Brands, 30 percent Raytheon, and 30 percent Coca-Cola, what is your portfolio return? (Round your answer to 2 decimal places.) Portfolio return: ____.__%Suppose TRF = 4%, TM = 9%, and b = 1.1. a. What is n, the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose rar increases to 5%. The slope of the SML remains constant. How would this affect ry and n? I. ry will increase by 1 percentage point and n will remain the same. II. Both ry and r, will decrease by 1 percentage point. III. Both rm and r, will remain the same.. IV. Both r and r, will increase by 1 percentage point. V. r will remain the same and r, will increase by 1 percentage point. -Select- v 2. Now suppose rar decreases to 3%. The slope of the SML remains constant. How would this affect ry and n? I. TM will decrease by 1 percentage point and n will remain the same. II. rs will remain the same and n will decrease by 1 percentage point. III. Both ry and r, will increase by 1 percentage point. IV. Both ry and r, will remain the same. V. Both ry and r, will decrease by 1 percentage point. Select
- Suppose you buy OMR2000 worth of stock on margin. The initial margin is 60% and the maintenance margin is 30%. a. How much have you borrowed? What is your equity? b. Suppose the value of the stock rises by 15% to OMR2300. What is the return on your investment? c. Suppose the value of the stock falls by 15% to OMR1700. What is the return on your investment? d. Does buying a stock on margin increase or decrease your risk of investment? Use the results in parts b and c to answer the question.Assume that the risk-free rate is 7.5% and the market risk premium is 5%. What is the required return for the overall stock market? Round your answer to one decimal place.Suppose TRF = 6%, TM = 11%, and b₁ = 1.2. a. What is n, the required rate of return on Stock i? Round your answer to one decimal place. 12 % b. 1. Now suppose TRF increases to 7%. The slope of the SML remains constant. How would this affect rm and r? I. Both rm and i will increase by 1 percentage point. II. rM will remain the same and r will increase by 1 percentage point. III. rM will increase by 1 percentage point and r₁ will remain the same. IV. Both rm and will decrease by 1 percentage point. V. Both rm and r will remain the same. I 2. Now suppose TRF decreases to 5%. The slope of the SML remains constant. How would this affect rm and n? I. Both rm and n will increase by 1 percentage point. II. Both rm and r will remain the same. III. Both rm and r₁ will decrease by 1 percentage point. IV. rM will decrease by 1 percentage point and r¡ will remain the same. V. rm will remain the same and ri will decrease by 1 percentage point. c. 1. Now assume that rRF remains at 6%, but rM…