You hear on the news that the S&P 500 was down 2.1% today relative to the risk-free rate (the market's excess return was -2.1%). You are thinking about your portfolio and your investments in Zynga and Proctor and Gamble. a. If Zynga's beta is 1.3, what is your best guess as to Zynga's excess return today? b. If Proctor and Gamble's beta is 0.4, what is your best guess as to P&G's excess return today? a. If Zynga's beta is 1.3, what is Zynga's excess return today is your best guess as to Zynga's excess return today? % (Round to one decimal place.)
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- You hear on the news that the S&P 500 was down 2.1% today relative to the risk-free rate (the market's excess return was -2.1%). You are thinking about your portfolio and your investments in Hewlett Packard and Proctor and Gamble. a. If Hewlett Packard's beta is 1.1, what is your best guess as to Hewlett Packard's excess return today? b. If Proctor and Gamble's beta is 0.4, what is your best guess as to P&G's excess return today? KIDE a. If Hewlett Packard's beta is 1.1, what is your best guess as to Hewlett Packard's excess return today? Hewlett Packard's excess return today is %. (Round to one decimal place.)You hear on the news that the S&P 500 was down 1.7% today relative to the risk-free rate (the market's excess return was - 1.7%). You are thinking about your portfolio and your investments in Hewlett Packard and Proctor and Gamble. a. If Hewlett Packard's beta is 1.2, what is your best guess as to Hewlett Packard's excess return today? b. If Proctor and Gamble's beta is 0.5, what is your best guess as to P&G's excess return today?You hear on the news that the S&P 500 was down 1.6% today relative to the risk-free rate (the market's excess return was -1.6%). You are thinking about your portfolio and your investments in Hewlett Packard and Proctor and Gamble. a. If Hewlett Packard's beta is 1.3, what is your best guess as to Hewlett Packard's excess return today? b. If Proctor and Gamble's beta is 0.5, what is your best guess as to P&G's excess return today? a. If Hewlett Packard's beta is 1.3, what is your best guess as to Hewlett Packard's excess return today? Hewlett Packard's excess return today is %. (Round to one decimal place.)
- You hear on the news that the S&P 500 was down 2.5% today relative to the risk-free rate (the market's excess return was -2.5%). You are thinking about your portfolio and your investments in Hewlett Packard and Proctor and Gamble. a. If Hewlett Packard's beta is 1.2, what is your best guess as to Hewlett Packard's excess return today? b. If Proctor and Gamble's beta is 0.5, what is your best guess as to Proctor and Gamble's excess return today? a. If Hewlett Packard's beta is 1.2, what is your best guess as to Hewlett Packard's excess return today? Hewlett Packard's excess return today is %. (Round to one decimal place.)You hear on the news that the S&P 500 was down 2.9% today relative to the risk-free rate (the market's excess return was - 2.9%). You are thinking about your portfolio and your investments in Hewlett Packard and Proctor and Gamble. a. If Hewlett Packard's beta is 1.1, what is your best guess as to Hewlett Packard's excess return today? b. If Proctor and Gamble's beta is 0.4, what is your best guess as to P&G's excess return today? a. If Hewlett Packard's beta is 1.1, what is your best guess as to Hewlett Packard's excess return today? Hewlett Packard's excess return today is __ % ? (Round to one decimal place.) b. If Proctor and Gamble's beta is 0.4, what is your best guess as to P&G's excess return today? Proctor and Gamble's excess return today __ % ? (Round to one decimal place.)(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Common Stock B Probability Return Probability Return0.20 10% 0.15 -4% 0.60 16% 0.35 7%0.20 21% 0.35 13% 0.15 20% a) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, what is the expected rate of return for stock A? What is the standard deviation? b. Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, what is the expected rate of return for stock B? What is the standard deviation? c. Based on the risk (as measured by the standard deviation) and return of each stock, which…
- (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Probability 0.35 0.30 0.35 Return 13% 14% 18% Common Stock B Return - 6% 7% 16% 20% Probability 0.15 0.35 0.35 0.15 (Click on the icon in order to copy its contents into a spreadsheet.)Assume that you are using the Capital Asset Pricing Model (CAPM) to find the expected return for a share of common stock. Your research shows the following: Beta = βi = 1.54 Risk free rate = Rf = 2.5% per year Market return = E(RM) = 6.5% per year Based on this information, answer the following: A. Based on the beta, how does the stock's risk compare to the market overall? On what do you base your answer? B. Based on the beta, how would you expect the stock's returns to react to a decrease in returns in the market overall? Why? C. According to the CAPM and the information given above, what is the expected return E(Ri) for this stock? D. If the required rate of return on this stock were 7% per year, would you invest? Why or why not?Suppose you have a portfolio that has $290 in stock A with a beta of 1.04, $1, 160 in stock B with a beta of1.34, and $870 in the risk-free asset. You have another $580 to invest. You wish to achieve a beta for yourwhole portfolio to be the same as the market beta. What is the beta of the added security?
- Compute the expected rate of return for Intel common stock, which has a 1.2 beta. The risk-free rate is 3.5 percent and the market portfolio has an expected return of 16 percent. Referring to above answer, why is the rate you computed the expected rate? Logan Morgan is considering an investment in one of two portfolios. Given the information that follows, which investment is better, based on risk (as measured by standard deviation) and the expected rate of return? Portfolio A Portfolio B Probability Return Probability Return .20 -2% .10 5% .50 19% .30 7% .30 25% .40 12% .20 14%QUESTIONS: 1) Assuming that the risk-free rate of return is currently 3,2%, the market risk premium is 6% whereas the beta of HelloFresh SH. stock is 1.8, compute the required rate of return using CAPM. 2) Compute the value of each investment based on your required rate of return and interpret the results comparing with the market values. 3) Which investment would you select? Explain why using appropriate financial jargon (language). 4) Assume HelloFresh SH's CFO Mr. Christian Gaertner expects an earnings upturn resulting increase in growth (rate) of 1%. How does this affect your answers to Question 2 and 3? 5) AACSB Critical Thinking Questions: A) Companies pay rating agencies such as Moody's and S&P to rate their bonds, and the costs can be substantial. However, companies are not required to have their bonds rated in the first place; doing so is strictly voluntary. Why do you think they do it? (Textbook page: 198) B) What are the difficulties in using the PE ratio to value stock?…(Expected rate of return and risk) Syntex, Inc is considering an investment in one of two common stocks Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and retum? Common Stock A Probability 0.25 0,50 0:25 Common Stock B Return 10% 17% 10% Probability 0.10 0:40 0:40 010 (Click on the soon in order to copy its contents into a spreadsheet) Return -6% 8% 15% 20% COD a. Given the information in the table the expected rate of return for stock A is 15.5% (Round to two decimal places) The standard deviation of stock A is 4 36% (Round to two decimal places)