You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset: a. Fill in the missing values in the table. (Leave no cells blank - be certain to enter 0 wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Security Firm A Firm B Firm C The market portfolio The risk-free asset Expected return Expected Return Sell Buy % Expected return 0.118 0.132 0.113 0.12 0.05 * With the market portfolio b-1. What is the expected return of Firm A? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard Deviation 0.23 0.74 0.74 0.23 0 % Correlation* 1.02 0.42 0.27 1 0 b-2. What is your investment recommendation regarding Firm A for someone with a well-diversified portfolio? b-3. What is the expected return of Firm B? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Beta 0.94 1.49 1 0
You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset: a. Fill in the missing values in the table. (Leave no cells blank - be certain to enter 0 wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Security Firm A Firm B Firm C The market portfolio The risk-free asset Expected return Expected Return Sell Buy % Expected return 0.118 0.132 0.113 0.12 0.05 * With the market portfolio b-1. What is the expected return of Firm A? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard Deviation 0.23 0.74 0.74 0.23 0 % Correlation* 1.02 0.42 0.27 1 0 b-2. What is your investment recommendation regarding Firm A for someone with a well-diversified portfolio? b-3. What is the expected return of Firm B? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Beta 0.94 1.49 1 0
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:You have been provided the following data about the securities
of three firms, the market portfolio, and the risk-free asset:
a. Fill in the missing values in the table. (Leave no cells blank -
be certain to enter 0 wherever required. Do not round
intermediate calculations and round your answers to 2
decimal places, e.g., 32.16.)
Security
Firm A
Firm B
Firm C
The market portfolio
The risk-free asset
Expected return
Expected Return
* With the market portfolio
Sell
Buy
0.118
0.132
0.113
0.12
0.05
%
Expected return
Standard Deviation
b-1. What is the expected return of Firm A? (Do not round
intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
0.23
0.74
0.74
0.23
0
%
Correlation*
1.02
0.42
0.27
1
0
b-2. What is your investment recommendation regarding Firm A
for someone with a well-diversified portfolio?
b-3. What is the expected return of Firm B? (Do not round
intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
Beta
0.94
1.49
1
0
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