At the beginning of 2007 (the year the iPhone was introduced), Apple's beta was 1.3 and the risk-free rate was about 3.8%. Apple's price was $83.17. Apple's price at the end of 2007 was $197.84. If you estimate the market risk premium to have been 5.8%, did Apple's managers exceed their investors' required return as given by the CAPM?

You ran a regression of the excess return on Walmart's stock on the excess return on the market. You found the following: alpha=1.5%, beta-2.818, R^2=0.623. If Walmart's total volatility was 0.310 in that same period, what must have been the markets volatility in that same period.

Q1) UPS, a delivery services company, has a beta of 1.1, and Wal-Mart has a beta of 0.7. The risk-free rate of interest is 4% and the market risk premium is 7%. What is the expected return on a portfolio with 30% of its money in UPS and the rest in Wal-Mart? Q2) IBM’s σ = 0.22; Dell’s σ = 0.13. The correlation between Dell and IBM is 0.32, and the weights are 50% each. Find the portfolio volatility (standard deviation). If the weights are now 30 % and 70 % for Dell and IBM respectively, how would the volatility of portfolio change? Briefly justify your answer.

An antitrust case has lead to you having to calculate a fair return (using the CAPM) for RadioEthiopea common stock. The risk free rate is 3.20%, while the expected return on the market is 4.70%. The shares have a volatility of 21.00%, while the market has a volatility of 13.00%. The correlation between the two sets of returns is 0.44. What is the fair return for RadioEthiopea common stock?

5. Last year, Rocket Inc. earned a 19% return. Farmer's Corp. earned 11%. The overall market return last year was 16%, and the risk-free rate was 2%. If Rocket stock has a beta of 1.8 and Farmer's has a beta of 0.5, which stock performed better once you take risk into account? Review Only Click the icon to see the Worked Solution. Rocket's expected return is %. (Enter as a percentage and round to one decimal place.) Farmer's expected return is %. (Enter as a percentage and round to one decimal place.) Which stock performed better once you take risk into account? (Select the best answer below.) A. Given its beta, Rocket should have earned a much higher return than it did (11% vs 19%). Farmer's, on the other hand, earned a higher return than we would have expected (27.2% vs 9.0%). So taking risk into account, Rocket was the better stock. B. Given its beta, Rocket should have earned a much higher return than it did (27.2% vs 19%). Farmer's, on the other hand, earned a higher return than…

Suppose the market portfolio has an expected return of 10% and a volatility of 20%, while Microsoft’s stock has a volatility of 30%. Microsoft’s equity cost of capital is 10%. Based on this information, which statement is most likely to be correct? (assume that all assumptions of CAPM are satisfied) Group of answer choices Microsoft’s beta is lower than 1. There is not enough information to determine Microsoft’s beta. Microsoft’s beta is 1. Microsoft’s beta is higher than 1.

GE, Inc has a beta of -0,45. When S&P500 index increases by 8% and the T-bill rate is 1%. What is the expected return of the company? Please use CAPM to solve.

Engler Corporation's stock had a required return of 9.50% last year when the risk - free rate was 2.50% and the market risk premium was 5.00%. Then an increase in investor risk aversion caused the market risk premium to rise by 1% from 5.00% to 6.00%. The risk-free rate and the firm's beta remain unchanged. What is the company's new required rate of return? a. 10.40% b 10.90% с. 11.80% d. 12.50% e. 13.50%

Please complete in Excel (and show work)

HR Corporation has a beta of 2.0, while LR Corporation's beta is 0.5. The risk-free rate is 10 percent, and the required rate of return on an average stock is 15 percent. Now the risk-free rate falls by 3 percentage points, the required return on the market falls to 11 percent, and the betas remain constant. When all of these changes are made, what will be the difference in the required returns on HR's and LR's stocks?