You are considering adding Gamma stock to your portfolio. What is the required return on the stock if it has a beta of 0.9, the risk-free rate is 3%, and the expected return on the market is 10%? If the expected return on the investment is 9%, would you add Gamma stock to your portfolio?

Q: beta of 1.40 and an expected return of 19%. Stock Z has a beta of 0.65 and an expected return of…

A: We need to compute expected return using CAPM (Capital asset pricing model) for each stock. CAPM…

Q: Assume the CAPM holds. You are holding a portfolio with the beta of 0.9 and the standard deviation…

A: Risk-free rate, Rf = 3.5%Market return, Rm = 10%Market standard deviation, Sm = 16%Portfolio Beta, B…

Q: volatility of 12%. Is the portfolio A you hold now efficient? If not, construct a portfolio that…

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Q: d. Suppose a new stock, C, with f = 18% and b = 2.0, becomes avail- able. Is this stock in…

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Q: You currently have $100 of 8%. Suppose the risk-free rate is 5%, and there is another portfolio that…

A: capital amount = $ 100,000. r(rp) = rf + x (rm-rf) = 5+x ( 20-5) ratio of standard deviation is…

Q: What is the expected return of a portfolio that has $8,000 invested in S and $2,000 invested in T?…

A: The expected return of the portfolio can be calculated as:E(R_p) = R_f + β_p * (E(R_m) -…

Q: Y has a beta of 1.50 and an expected return of 17 percent. Stock Z has a beta of 0.80 and an…

A: CAPM gives the required rate of return based beta of the stock and risk free rate and market average…

Q: Consider the single factor APT. Portfolio A has a beta of 1.5 and an expected return of 19%.…

A: The single factor APT assumes that the expected return of an asset is proportional to its beta,…

Q: 1.25

A: Please note that as per Bartleby answering guidelines, we are allowed to answer only first 3…

Q: You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and…

A: Proportion invested in Stock A, Stock B and Treasury Bills are equal that is 1/3 Beta of Stock A is…

Q: If the risk free rate is 6 %, the expected return on the market portfolio is 12% and the beta of…

A: The Capital Asset Pricing Model (CAPM) is the model which shows the relationship between the…

Q: A portfolio consists of Stock X and Stock Y. Data for the 2 stocks is shown below. Calculate the…

A: Hey, since there are multiple subpart questions posted, we will answer the first three subpart…

Q: You have a portfolio that is equally invested in Stock F with a beta of .95, Stock G with a beta of…

A: Calculation of beta of the portfolio:- The market beta is always equal to one. Portfolio beta = Beta…

Q: (Portfolio beta and CAPM) You are putting together a portfolio made up of four different stocks.…

A: A portfolio is an assortment of securities—cash, stocks, bonds, and other investments—that an…

Q: Suppose that a portfolio consist of three securities: A, B and C with expected rates of return of…

A: Portfolio refers to basket of different financial assets in which investment is made by single…

Q: How do I calculate the Portfolio Expected Return: You own a portfolio that has $4,600 invested in…

A: In this question we are required to calculate expected return of our portfolio having two stocks…

Q: You have been provided the following information as part of a consultation query: The risk free rate…

A: According to the CAPM method, the formula for calculation the required rate of return is: Required…

Q: Your client decides to invest $60 million in Flama and $40 million in Blanca stocks. The risk-free…

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Q: Please help me with 11-5 ??‍♀️

A:

Q: Assume the CAPM holds. You are holding a portfolio with the beta of 2 and the standard deviation of…

A: We have an inefficient portfolio here. We have to make it efficient and find out the possibility of…

Q: a) Assuming Treasury bills yield is 1% and the market risk premium is 7%. If your portfolio beta is…

A: Note: Hi! Thank you for the question, As per the Honor code, we are allowed to answer one question…

Q: You have chosen a stock for your two-asset portfolio and you need to choose one more stock. Which of…

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Q: You estimate that a passive portfolio, for example, one invested in a risky portfolio that mimics…

A: The Capital Market Line (CML) and the Capital Allocation Line (CAL), two ideas from contemporary…

Q: Suppose the risk-free rate is 8%. The expected return on the market is 16%. If a particular stock…

A: Capital Asset Pricing Model: This model explains the relationship between the expected return and…

Q: Consider the CAPM. The expected return on stock a with a beta of 1.5 is 26% The stock with a boto

A: CAPM is the capital assets pricing model which gives the required rate of return based on the beta…

Q: what is the stock's predicted return

A: Market return is 10%return on the SMB portfolio (rSMB) is 2.0 return on the HML portfolio (rHML) is…

Q: You've assembled the following portfolio: Stock Expected return Beta Portfolio weight 1 0.128 1.8…

A: Beta is primarily used to calculate the systematic risk in the capital asset pricing model. The beta…

Q: For the coming year you have determined that the following possibilities are most likely for stock…

A: Working of the expected return on the stock A is shown:

Q: A stock that you are interested in has a beta of 5. The total value of your portfolio is $200,000…

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Q: Max wants a portfolio with a beta of 1.2. He currently has two stocks in his portfolio. Stock A with…

A: Using Capital Asset Pricing Model expected return is calculated. Expected return = risk free rate +…

Q: Assume you wish to construct a portfolio by investing $4000 in Stock A which has a return of 6% and…

A: Expected return of a portfolio is the sum of weighted average returns of individual stocks.

Q: (1) How many put options with strike price X = 110 are necessary in the portfolio to have a certain…

A: (1) Hedge ratio of put with strike 100 = (MAX(100-120,0)-MAX(100-90,0))/(120-90)= -0.333333333Delta…

Q: Stock X has a beta of 2.5 and an expected return of 22.5%. Stock Y has a beta of 1.5 and an expected…

A: Stock XStock YExpected return22.5%15.0%Beta2.51.5Market risk premium7.2%

Q: An equally-weighted portfolio that consists of 13 stocks has a beta of 1.5. If you replace one of…

A: As per the given information: Number of Stocks =13 Beta of 13 stocks = 1.5 Replacing Stock with a…

Q: When the return on the market portfolio goes up by 5%, the return on Stock A goes up on average by…

A: Return is the basic factor which affects the investor’s decision. CAPM is the tool which is used to…

Q: You currently hold a diversified stock portfolio that is exactly as risky as the market.  You are…

A: True Options are 1,3,4,5. 1.When the beta value increases the risk premium of the portfolio. The…

Q: The market portfolio has expected return of 12% and risk of 19%, and the risk-free rate is 5%.…

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Q: You currently have $100,000 invested in a portfolio that has an expected return of 10% and a…

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Q: Stock A has an expected return of 10 percent and a beta of 1.0. Stock B has a beta of 2.0. Portfolio…

A: CAPM stands for capital asset pricing model. It explains the relationship between systematic risk…

Q: By how much does the required return on the riskier stock exceed the required return on the less…

A: Required return: It is the minimum rate of return an investor will seek for investing in a company.…

Q: Calculate the Sharpe ratio, Treynor ratio, M-squared and Jensen's alpha for a stock with an expected…

A: 1) Sharp ratio = (Return of the portfolio - Return of Risk free investment) / Standard deviation of…

Q: You invest in a portfolio of 5 stocks with an equal investment in each one. The betas of the 5…

A: This consists of two parts: In the first part we need to calculate the beta of the portfolio. In the…