What is the CAPM required return for Stock Z, in decimal form? Round your answer to 4 decimal places (example: if your answer is .13579,  you should enter .1358).  Margin of error for correct responses: +/- .0005.                 expected return (implied by market price)      Beta     Stock Z 9.7% 1.43     MRP 6% ?     T-bonds 5% ?

Consider the following Information: Stock Return if Market Return Is: Stock -12% 12% 12 14 C D Stock A B -12 -32 11 20 What is the beta of each of the stocks? (Leave no cells blank - be certain to enter "0" wherever required. Use decimals, not percents, in your calculations. A negative value should be indicated by a minus sign. Round your answers to 1 decimal place.) D E 22 15 Beta

What is the expected return of Stock B given the information below about its returns across future states of nature?   Enter return in decimal form, rounded to 4th digit, as in "0.1234"

b) Suppose that you observe the following information in Table 2 for stocks A and B: Table 2 Expected Return (%) 11% Stock Beta A 0.8 В 14% 1.5 The risk-free rate of return is 6% and the expected rate of return on the market index is 12%. Using the Single-Index Model, calculate the alpha of both stocks. Show your calculations. Explain what the alpha of the single-factor model represents and interpret your results.

2. Required Rate of Return Suppose TRF = 4%, FM 9%, and FA = 8%. (a) Calculate Stock A's beta. Round your answer to one decimal place. - (b) If Stock A's beta were 1.3, then what would be A's new required rate of return? Round your answer to one decimal place. % 22222222 122122222322 2014 25226225 250-50 22 352525 2----- 2015

You have a portfolio with the following:   Stock Number of Shares Price Expected Return W 975               $ 56            13%          X 875               33            17             Y 625               69            15             Z 850               54            16                 What is the expected return of your portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal growth Recession Probability Ending Price 0.26 $ 140 0.25 110 0.49 80 Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) — E(r)]² to compute the mean and standard deviation of the HPR on - S S Mean Standard deviation HPR (including dividends) 55.0% 21.0 -16.0 stocks. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. % %

Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.50 0.160 Repete Co. 1.19 0.133 Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Expected Return on Market Pete Corp. % Repete Co. % What is the risk-free rate? (Do not round intermediate calculations. Round the final answer to 3 decimal places.) Risk-free rate

Consider the following multifactor (APT) model of security returns for a particular stock. Factor Risk Premium 8% 9 7 Factor Inflation Industrial production Oil prices Factor Beta 1.1 0.6 0.3 a. If T-bills currently offer a 7% yield, find the expected rate of return on this stock if the market views the stock as fairly priced. (Do not round intermediate calculations. Round your answer to 1 decimal place.) X Answer is complete but not entirely correct. Expected rate of return 19.0 X %

Consider the following information: Stock Return if Market Return Is: Stock –13% 10% A 0 14 B –5 21 C –25 36 D 10 8 E 15 -10   What is the beta of each of the stocks? (Leave no cells blank - be certain to enter "0" wherever required. Use decimals, not percents, in your calculations. A negative value should be indicated by a minus sign. Round your answers to 1 decimal place.)       Stock Beta A   B   C   D   E