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##### Week 5 Homework - Finance

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Question;Week 5 Homework - Finance;Top of Form;Question 1;1. The stock of Billingsley;United has a beta of 0.92. The market risk premium is 8.4 percent and the;risk-free rate is 3.2 percent. What is the expected return on this stock?;8.87 percent;9.69 percent;10.93 percent;11.52 percent;12.01 percent;Question 2;1. You own a portfolio that;has $1,900 invested in Stock A and $2,700 invested in Stock B. If the expected;returns on these stocks are 9 percent and 15 percent, respectively, what is the;expected return on the portfolio?;10.57 percent;11.14 percent;11.96 percent;12.52 percent;13.07 percent;Question 3;1. A $36,000 portfolio is;invested in a risk-free security and two stocks. The beta of stock A is 1.29;while the beta of stock B is 0.90. One-half of the portfolio is invested in the;risk-free security. How much is invested in stock A if the beta of the portfolio;is 0.58?;$6,000;$9,000;$12,000;$15,000;$18,000;Question 4;1. You own a portfolio of;two stocks, A and B. Stock A is valued at $6,540 and has an expected return of;11.2 percent. Stock B has an expected return of 8.1 percent. What is the;expected return on the portfolio if the portfolio value is $9,500?;9.58 percent;9.62 percent;9.74 percent;9.97 percent;10.23 percent;Question 5;1. The systematic risk is;same as;Unique risk;Diversifiable risk;Asset-specific risk;Market risk;Unsystematic risk;Question 6;1. Portfolio;diversification eliminates which one of the following?;Total investment risk;Portfolio risk premium;Market risk;Unsystematic risk;Reward for bearing risk;Question 7;1. What is the beta of the;following portfolio?;0.98;1.02;1.11;1.14;1.20;Question 8;1. What is the beta of the;following portfolio?;1.08;1.14;1.17;1.21;1.23;Question 9;1. Standard deviation;measures _____ risk while beta measures _____ risk.;systematic, unsystematic;unsystematic, systematic;total, unsystematic;total, systematic;asset-specific, market;Question 10;1. You have observed the;following returns on ABC's stocks over the last five years;3.8%, 8.8%, -5.8%, 12.7%, -3.8%;What is the arithmetic average returns on the;stock over this five-year period.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 11;1. Suppose a stock had an;initial price of $98.05 per share, paid a dividend of $8.6 per share during the;year, and had an ending share price of $86.45. What are the percentage returns?;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 12;1. You have observed the;following returns on ABC's stocks over the last five years;2.2%, 9.1%, 8.9%, 12.9%, 6.4%;What is the geometric average returns on the;stock over this five-year period.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 13;1. You have observed the;following returns on ABC's stocks over the last five years;2.1%, 8.8%, 12.4%, 13.1%, 4.9%;What is the arithmetic average returns on the;stock over this five-year period.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 14;1. Calculate the expected;returns of your portfolio;Stock;Invest;Exp Ret;A;$199;3.6%;B;$714;14.3%;C;$455;25%;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 12.345% then enter as 12.35 in the answer box.;Question 15;1. You own a portfolio;invested 21.65% in Stock A, 12.78% in Stock B, 13.99% in Stock C, and the;remainder in Stock D. The beta of these four stocks are 0.48, 1.2, 0.79, and;1.26. What is the portfolio beta?;Note: Enter your answer rounded off to two;decimal points. For example, if your answer is 12.345 then enter as 12.35 in;the answer box.;Question 16;1. Suppose the real rate is;5.67% and the inflation rate is 5.08%. Solve for the nominal rate.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 17;1. Calculate the expected;returns of your portfolio;Stock;Invest;Exp Ret;A;$349;8%;B;$856;19.6%;C;$1,367;27.8%;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 12.345% then enter as 12.35 in the answer box.;Question 18;1. You have observed the;following returns on ABC's stocks over the last five years;4.9%, 8.1%, -13%, 11.2%, -8.6%;What is the geometric average returns on the;stock over this five-year period.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 19;1. Suppose a stock had an;initial price of $78.69 per share, paid a dividend of $7.8 per share during the;year, and had an ending share price of $81.95. What are the percentage returns?;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 20;1. A portfolio is invested;31.1% in Stock A, 19.4% in Stock B, and the remainder in Stock C. The expected;returns are 11.3%, 20.8%, and 6.4% respectively. What is the portfolio's;expected returns?;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 12.345% then enter as 12.35 in the answer box.;Question 21;1. You own a portfolio;invested 22.72% in Stock A, 16.67% in Stock B, 28.63% in Stock C, and the;remainder in Stock D. The beta of these four stocks are 0.65, 0.19, 0.73, and;1.39. What is the portfolio beta?;Note: Enter your answer rounded off to two;decimal points. For example, if your answer is 12.345 then enter as 12.35 in;the answer box.;Question 22;1. Suppose a stock had an;initial price of $92.58 per share, paid a dividend of $7.9 per share during the;year, and had an ending share price of $85.61. What are the dollar returns?;Note: Enter your answer rounded off to two;decimal points. Do not enter $ or comma in the answer box. For example, if your;answer is $12.345 then enter as 12.35 in the answer box.;Question 23;1. Suppose a stock had an;initial price of $75.53 per share, paid a dividend of $8 per share during the;year, and had an ending share price of $80.82. If you own 277 shares, what are;the dollar returns?;Note: Enter your answer rounded off to two;decimal points. Do not enter $ or comma in the answer box. For example, if your;answer is $12.345 then enter as 12.35 in the answer box.;Question 24;1. Suppose the returns for;Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.;Compute the standard deviation of the returns.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 25;1. Suppose a stock had an;initial price of $93.51 per share, paid a dividend of $5.8 per share during the;year, and had an ending share price of $100.77. What are the percentage returns;if you own 25 shares?;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 26;1. Suppose the real rate is;3.02% and the nominal rate is 13.89%. Solve for the inflation rate.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 27;1. Suppose the nominal rate;is 13.62% and the inflation rate is 5.45%. Solve for the real rate.;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 0.12345 then enter as 12.35 in the answer box.;Question 28;1. Based on the following;information, calculate the expected returns;Prob;Return;Recession;30%;48.6%;Boom;70%;24.1%;Note: Enter your answer in percentages rounded;off to two decimal points. Do not enter % in the answer box. For example, if;your answer is 12.345% then enter as 12.35 in the answer box.

Paper#49004 | Written in 18-Jul-2015

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