ANSWER EACH PART PLEASE! Consider the following information for stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlationcoefficients is between 0 and 1.)StockExpected ReturnStandard DeviationBetaA8.80%16% 0.8В10.70161.2C12.60161.6Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium. (That is, required returns equal expected returns.)a. What is the market risk premium (rM - TRF)? Round your answer to two decimal places.%b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places.c. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places.%d. Would you expect the standard deviation of Fund P to be less than 16%, equal to 16%, or greater than 16%?I. Less than 16%II. Greater than 16%III. Equal to 16%V -Select-

The market risk premium is the return over risk-free return received by the investor for bearing an…

Consider the following information for stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta 8.80% 16% 0.8 10.70 16 1.2 C 12.60 16 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium. (That is, required returns equal expected r a. What is the market risk premium (M - TRF)? Round your answer to two decimal places. % b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. c. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. d. Would you expect the standard deviation of Fund P to be less than 16%, equal to 16%, or greater than 16%? I. Less than 16%

Consider the following information for stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta 8.80% 16% 0.8 10.70 16 1.2 C 12.60 16 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium. (That is, required returns equal expected r a. What is the market risk premium (M - TRF)? Round your answer to two decimal places. % b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. c. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. d. Would you expect the standard deviation of Fund P to be less than 16%, equal to 16%, or greater than 16%? I. Less than 16%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta A 8.44 % 16 % 0.7 B C 1.1 1.6 10.12 12.22 16 16 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is the market risk premium (FM - TRF)? Round your answer to two decimal places. % b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. c. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two…
Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta A 8.30 % 15 % 0.7 B 10.30 15 1.2 C 11.50 15 1.5 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet What is the market risk premium (rM - rRF)? Round your answer to two decimal places. fill in the blank 2% What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. fill in the blank 3 What is the required return of…
Consider the following information for Stocks A,B, and C. The returns on the three stocks are positively correlated, but they are not perfectlycorrelated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation BetaA 9.55% 15% 0.9B 10.45 15 1.1C 12.70 15 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is5.5%, and the market is in equilibrium. (That is, required returns equal expected returns.)a. What is the market risk premium (rM - rRF)?b. What is the beta of Fund P?c. What is the required return of Fund P?d. Would you expect the standard deviation of Fund P to be less than 15%, equal to 15%,or greater than 15%? Explain.
Consider the following information for three stocks, Stock A, Stock B, and Stock C. The returns on each of the three stocks are positively correlated, but they are not perfectly correlated. (That is, all of the correlation coefficients are between 0 and 1.) Expected Standard Stock Return Deviation Beta Stock A 10% 20% 1.0 Stock B 10 20 1.0 Stock C 12 20 1.4 Portfolio P has half of its funds invested in Stock A and half invested in Stock B. Portfolio Q has one third of its funds invested in each of the three stocks. The risk - free rate is 5 percent, and the market is in equilibrium. (That is, required returns equal expected returns.) What is the market risk premium (kM - KRF)?
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Consider the following information for stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expected Return Standard Deviation Beta A 8.90% 14% 0.8 B 10.55 14 1.1 C 13.30 14 1.6 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 4.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) What is the market risk premium (rM - rRF)? Round your answer to one decimal place. % What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. % What would you expect the standard deviation of Fund P to be? Less than 14% Greater than 14% Equal to 14%
Consider the following information for stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Expected Return Standard Deviation Beta 10.55% 15% 0.9 11.45 15 1.1 с 14.15 15 1.7 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 6.5%, and the market is in equilibrium. (That is, required returns equal expected returns.) a. What is the market risk premium (rM - TRF)? Round your answer to one decimal place. % b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. c. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. % d. What would you expect the standard deviation of Fund P to be? I. Less than 15% II. Greater than 15% III. Equal to 15% -Select- Stock A B
Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Standard Deviation Stock Expected Return A 8.88% B с X 10.82 12.76 THATH 14% 14 14 Beta 0.8 1.2 Fund P has one-third of its funds invested in each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium. (That is, required returns equal expected returns.) The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. 1.6 Open spreadsheet a. What is the market risk premium (H-AF)? Round your answer to two decimal places. b. What is the beta of Fund P? Do not round intermediate calculations. Round your answer to two decimal places. c. What is the required return of Fund P? Do not round intermediate calculations. Round your answer to two…

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