You are given the following information: Stock A has a beta of 0.95, a standard deviation of 52% and an expected return of 11.575%. Stock B has a beta of 1.00, a standard deviation of 32% and an expected return of 12%. Stock C has a beta of 1.15 and a standard deviation of 47%. Stock D has a beta of 1.25, a standard deviation of 37% and an expected return of 14.125%. What is the expected return of C?
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You are given the following information:
Stock A has a beta of 0.95, a standard deviation of 52% and an expected return of 11.575%.
Stock B has a beta of 1.00, a standard deviation of 32% and an expected return of 12%.
Stock C has a beta of 1.15 and a standard deviation of 47%.
Stock D has a beta of 1.25, a standard deviation of 37% and an expected return of 14.125%.
What is the expected return of C?
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- The index model for stock A has been estimated with the following result: RA = 0.01 + 0.9RM + eA. If σM = 0.25 and R2A = 0.25, the standard deviation of return of stock A is:Stock A has an expected return of 18% and a standard deviation of 38%. Stock B has an expected return of 14% and a standard deviation of 21%. The correlation coefficient between two stocks is negative 0.4. The risk-free rate is 8%. (Round your flnal answers to 2 decimal places (e.g. 0.963 would be entered as 0.96)). a) Calculate the Sharpe ratio for the two stocks. Stock A Stock B b) Assume that you can invest in both of these assets in portfolio C. How much should you invest in stock A and stock B to obtain an expected return of 17%? (Enter as declimals) Welght A Welght B c) Calculate the Sharpe ratio of portfolio C. d) Based on all the statistics you calculated so far, would you rather invest in portfolio C, or in the individual stocks A and B? (Enter A, B. or C)Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 30% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx= CVy= 2
- Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 30% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx= CVy= b. Which stock is riskler for a diversified investor? I. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is less risky. Stock Y has the higher beta so it is less risky than Stock X. II. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is riskler. Stock Y has the higher beta so it is riskier than Stock X. III. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of…Help me pleaseStock X has a 9.5% expected return, a beta coefficient of 0.8, and a 30% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 20.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's required rate of return. Round your answers to two decimal places. rx = ry = Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations. CVx = CVy =
- The index model has been estimated for stock A with the following results: RA = 0.01 + 1.2RM + eA. σM = 0.15; σ(eA) = 0.10. The standard deviation of the return for stock A isStocks A and B are quite similar: Each has an expected return of 12%, a beta of 1.2, and a standard deviation of 25%. The returns on the two stocks have a correlation of 0.6. Portfolio P has 50% in Stock A and 50% in Stock B. Which of the following statements is CORRECT? a. Portfolio P has a standard deviation that is greater than 25%. b. Portfolio P has an expected return that is less than 12%. c. Portfolio P has a standard deviation that is less than 25%. d. Portfolio P has a beta that is less than 1.2. e. Portfolio P has a beta that is greater than 1.2.Stock X has a 9.0% expected return, a beta coefficient of 0.7, and a 40% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 20% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. Calculate each stock's required rate of return. Round your answers to one decimal place. rx = % ry = % Calculate the required return of a portfolio that has $7,500 invested in Stock X and $2,500 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places. rp = %
- Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 40% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 20% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. a. Calculate each stock's coefficient of variation. Do not round intermediate calculations. Round your answers to two decimal places. CVx = CVy = b. Which stock is riskier for a diversified investor? I. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviation of expected returns is riskier. Stock Y has the lower standard deviation so it is riskier than Stock X. II. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is less risky. Stock Y has the higher beta so it is less risky than Stock X. III. For diversified investors the relevant risk is measured by beta. Therefore,…Suppose Stock A has an expected return of 18% and a variance of 0.17, while Stock B has an expected return of 11% and a variance of 0.056. The covariance between Stocks A and B is -0.075. What is the expected return and standard deviation of a portfolio with 60% in A and 40% in B?Stock X has a beta of 0.7 and Stock Y has a beta of 1.3. The standard deviation of each stock's returns is 20%. The stocks' returns are independent of each other, i.e., the correlation coefficient, r, between them is zero. Portfolio P consists of 50% X and 50% Y. Given this information, which of the following statements is CORRECT? 1) Portfolio P has a standard deviation of 20%. 2) The required return on Portfolio P is equal to the market risk premium (RM - TRF). 3) Portfolio P has a beta of 0.7. 4) Portfolio P has a beta of 1.0 and a required return that is equal to the riskless rate, TRF. Portfolio P has the same required return as the market (rm). 5)