Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The Treasury bill rate is 3.1%, and the expected return on the market portfolio is 10.2%. Use the
Question: If an investment with a beta of 1 offers an expected return of 7.8%, does it have a positive
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- You have been given the following information: The required return of the market is 14.5% The risk free rate is 3.5% The beta for your investment is .95 Required: Calculate the required rate of return for your investment, with the above data Assume that that the beta for the investment is 1.95 calculate the new required rate of return for your investment.arrow_forwardCapital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Risk-free rate, RF Market return, m Beta, b 5% 8% 1.3 The required return for the asset is %. (Round to two decimal places.)arrow_forwardThe following information is provided: The risk-free rate is 2% The expected market returns are 11% If the beta of an asset changes from 0.8 to 1.5, what is the additional return that you require on this asset (in %, please round on 2 decimals)?arrow_forward
- The beta on risky asset A is 1.8 and the beta on risky asset Bis 1.1. The expected return on the market portfolio is 10% and the risk free rate of return is 4%. Consider a portfolio comprising the two riskypssets and the risk-free asset where you invest 50% in risky asset A and 30% in risky asset B. What is (i) the beta of a portfolio and fi) the expected return of the portfolio? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a None of the above b. (i) 0.97 and (ii) 9.829% (1) 1.23 and (ii) 9.8296 (1) 1.23 and (ii) 11.38% ) 0.97 and (ii) 11.38% earrow_forward4. Explain what the Capital Asset Pricing Model (CAPM) is and calculate and explain the result of the CAPM based on the following data. a. Expected Return: 8% b. Risk-free rate: 4% c. Beta of the investment: 1.2 ER=Rf+B(ERm - Rf) where: ER = expected return of investment Rf risk-free rate B;= beta of the investment - (ERm - Rf) = market risk premiumarrow_forwardIf the return on the risk-free asset is 2.25% (Rf = 2.25%) and the market return is 6.50% (Rm = 6.50%), what is the beta of Bank of America, BAC, if it has had a return of 9.14%? You must show all counts.arrow_forward
- Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Risk-free rate, RF 5% Market return, m 10% ****** The required return for the asset is%. (Round to two decimal places.) Beta, b 0.6arrow_forwardWhat is the expected return on asset A if it has a beta of 0.5, the expected market return is 13%, and the risk-free rate is 3%? O 6.5% 8% 9.5% 7% O 5%arrow_forwardYou looked up the market risk return to be 12%. The risk-free rate of return is 2%, and General Motors has a beta of 1.2. According to the Capital Asset Pricing Model (CAPM), what is its expected return? A. 12.4% B. 14.0% C. 10.4% D. 13.2%. Need typed answer only .Please give answer within 45 minutesarrow_forward
- Hastings Entertainment has a beta of 0.65. If the market return is expected to be 11% and the risk-free rate is 4%, what is Hastings' required return? Use the capital asset pricing model.arrow_forwardAsset W has an expected return of 13.4 percent and a beta of 1.6. If the risk-free rate is 5.0 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Do not round intermediate calculations and enter your expected return answers as a percent rounded to 2 decimal places, e.g., 32.16. Round your beta answers to 3 decimal places, e.g., 32.161.) Asset W has an expected return of 13.4 percent and a beta of 1.6. If the risk-free rate is 5.0 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Do not round intermediate calculations and enter your expected return answers as a percent rounded to 2 decimal places, e.g., 32.16. Round your beta answers to 3 decimal places, e.g., 32.161.)arrow_forwardCapital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Risk-free rate, RF 1% The required return for the asset is %. (Round to two decimal places.) C Market return, m 5% Beta, b 0.5arrow_forward
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