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##### Finance Homework Assignment Problems

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Question;Consider the following information: Rate of Return If State OccursState of Probability of Economy State of Economy Stock A Stock B Recession .35 .07 -.17 Normal .40 .09 .16 Boom .25 .13 .36a. Calculate the expected return for the two stocks. (Round your answers to 2 decimal places. Omit the "%" sign in your response.) Expected Return for A % Expected Return for B % b. Calculate the standard deviation for the two stocks. (Round your answers to 2 decimal places. Omit the "%" sign in your response.) Standard deviation for A % Standard deviation for B % Need help figuring out standard deviation7.value:3.00 points You did not receive credit for this question in a previous attemptProblem 11-9Consider the following information: Rate of Return If State OccursState of Probability of Economy State of Economy Stock A Stock B Stock C Boom .25 .18 .32 .41 Good .20 .12 .15 .15 Poor .40 .05 -.08 -.06 Bust .15 -.01 -.16 -.09 a. Your portfolio is invested 25 percent each in A and C, and 50 percent in B. What is the expected return of the portfolio? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Expected return % b-1. What is the variance of this portfolio? (Round your answer to 5 decimal places.) Variance of this portfolio b-2. The standard deviation? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Standard deviation % **Need help figuring out standard deviation.8.value:4.00 points You did not receive credit for this question in a previous attemptProblem 11-10Fill in the missing information in the following table. Assume that Portfolio AB is 60 percent invested in Stock A. (Round your answer to 2 decimal places. Negative amounts should be indicated by a minus sign. Omit the "%" sign in your response.) Annual Returns on Stocks A and B Year Stock A Stock B Portfolio AB 2006 14 % 24 % % 2007 35.8 % -36.2 % % 2008 -18.6 % 46.2 % % 2009 25.4 % 16.6 % % 2010 14.2 % 25.8 % % Avg return % % % Std deviation % % %Only was able to figure out average return.11.value:1.00 pointsProblem 12-2A stock has an expected return of 11.2 percent, its beta is.50, and the risk-free rate is 4 percent. What must the expected return on the market be? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Expected return % Don?t know how to figure out expected return. Please show all steps. I need to know how to figure out for the test.Problem 12-3A stock has an expected return of 15.9 percent, a beta of 1.70, and the expected return on the market is 11.2 percent. What must the risk-free rate be? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Risk-free rate % You did not receive credit for this question in a previous attemptProblem 12-10A stock has a beta of 1.2 and an expected return of 8 percent. A risk-free asset currently earns 3 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Expected return % b. If a portfolio of the two assets has a beta of 1.0, what are the portfolio weights?(Round your answers to 2 decimal places. Omit the "%" sign in your response.) Weight xS % xrf % c. If a portfolio of the two assets has an expected return of 6 percent, what is its beta? (Round your answer to 2 decimal places.) Beta d. If a portfolio of the two assets has a beta of 2.40, what are the portfolio weights? (Negative amounts should be indicated by a minus sign. Omit the "%" sign in your response.) Weight xS % xrf % 20.value:1.00 points You did not receive credit for this question in a previous attemptProblem 12-13Stock Y has a beta of 1.5 and an expected return of 15.5 percent. Stock Z has a beta of 0.4 and an expected return of 7 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Risk-free rate % 21.value:2.00 points You did not receive credit for this question in a previous attemptProblem 12-15Suppose you observe the following situation: Security Beta Expected Return Peat Co. 1.20 14.6 Re-Peat Co. .60 10.3 Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Expected return % Risk-free rate %

Paper#48705 | Written in 18-Jul-2015

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