Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Suppose Autodesk stock has a beta of 2.17, whereas Costco stock has a beta of 0.71. If the risk-free interest rate is 6% and the expected return of the market portfolio is 11.5%, what is the expected return of a portfolio that consists of 65% Autodesk stock and 35% Costco stock, according to the CAPM?arrow_forwardThe expected return on Bevo stock is 12.6 percent. If the expected return on the market is 10 percent and the beta for Bevo is 1.4, then what is the risk-free rate? O 2.0% O 2.5% O 3.5% O 3.0%arrow_forwardThe risk-free rate of return is 3% and the market risk premium is 8%. You hold three stocks in your portfolio: Stock A B C E(R) 9.4% 14.2% 10.2% Value 15,000 33,000 27,000 What is the beta and expected return of your portfolio under CAPM?arrow_forward
- You expect the risk-free rate to be 4 percent and the market return to be 10 percent. You also have the following information about three stocks. Current Expected Expected Stock Beta Price Price Dividend U 1.5 $10 $11.50 $1.00 N 1.1 $27 $30 $0.00 Ο 0.8 $35 $36 $1.50 (Question 2 of 2) What is the required rate of return (based on the CAPM) for an equally weighted portfolio of the three stocks? (Enter your answer as a percentage, i.e., "10.25" for 10.25 percentarrow_forwardA stock has an expected return of 15 percent. Beta is 0.75. And the risk-free rate is 75 percent. What must the expected return on the market be? (a) 18.38 % (b) 18.20 % (c) 10.00 % (d) 16.63 % (e) 17.50 %.arrow_forwardSuppose the expected return on the market is 10 percent and the risk-free rate is 5 percent. Solomon Inc. stock has a beta of 1.4. What is the expected return on the Solomon stock? Question 9 options: A) 12.8% B) 19.3% C) 12.0% D) 7.8%arrow_forward
- An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 2.40, and $50,000 in stock B which has a beta of 0.60. The return on the market is equal to 8% and treasure bonds have a yield of 3% (rRF). What’s the portfolio beta? 0.60 1.30 1.50 1.80 Using the information in Question 41, calculate the required rate of return on the investor’s portfolio 11.0% 15.0% 12.0% 10.5% A retail store is offering a diamond ring for sale for 36 months at $128 per month. The retail price of the ring is $4,000. What is the interest rate on this offer? 9.43% 11.20% 11.98% 12.11%arrow_forwardWhat is the expected return for Stock A if it has a beta of 1.25, the risk-free rate is 1.5%, and the expected market return is 10.2%? 12.38% 14.25% 12.75% 11.25% 10.88%arrow_forwardYour portfolio has a beta of 1.57. The portfolio consists of 16 percent U.S. Treasury bills, 35 percent Stock A, and 49 percent Stock B. Stock A has a risk level equivalent to that of the overall market. What is the beta of Stock B?arrow_forward
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