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A stock with a beta of 0.9 has an expected rate of return of 10%. If the market return this year turns out to be 8 percentage points below expectations, what is your best guess as to the rate of return on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) Stock return %

A stock with a beta of 1.8 has an expected rate of return of 16%. If the market return this year turns out to be 6 percentage points below expectations, what is your best guess as to the rate of return on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

A certain stock has a beta of 1.2. If the risk-free rate of return is 4.5 percent and the market risk premium is 8 percent, what is the expected return of the stock? What is the expected return of a stock with a beta of 1.08? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Beta of 1.2 expected return % Beta of 1.08 expected return %

For the coming year you have determined that the following possibilities are most likely for stock A: Economic State Probability Return Good 0.60 22 Bad 0.40 -10 What is the standard deviation for stock A? answer format:  show your answer in percent (without the % sign) and to 1 decimal place. For example, 12.56 should be shown as 12.6

A stock has a beta of 1.06, the expected return on the market is 10 percent, and the risk- free rate is 4.95 percent. What must the expected return on this stock be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return Help % Save & Exit

Suppose your expectations regarding the stock price are as follows: State of the Market Boom Normal growth Recession. Probability Ending Price 0.30 $ 140 0.22 110 0.48 80 Mean Standard deviation. Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) - E(r)]² to compute the mean and standard deviation of the HPR on stocks. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. HPR (including dividends) 55.5% 15.5 -14.0 % %

A stock has a beta of 1.08, the expected return on the market is 10.2 percent, and the risk-free rate is 4.85 percent. What must the expected return on this stock be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return %

A stock you are holding has a beta of 2.0 and the stock is currently in equilibrium. The required rate of return on the stock is 15% versus a required return on an average stock of 10%. Now the required return on an average stock increases by 30.0% (not percentage points). The risk-free rate is unchanged. By what percentage (not percentage points) would the required return on your stock increase as a result of this event? Please explain your answer and show your calculations.

5. Given the following expectations for the next year, what is the expected return, standard deviation, and beta of Stock A? Use the excel sheet we covered to find the answer. Returns Probability Stock A Market 0.10 0.05 0.02 0.25 0.09 0.08 0.30 0.13 0.12 0.25 0.19 0.15 0.10 0.21 0.16

Consider the rate of return of stocks ABC and XYZ.   Year rABC rXYZ 1 20 % 28 % 2 8   11   3 16   19   4 4   1   5 2   −9       a. Calculate the arithmetic average return on these stocks over the sample period.           b. Which stock has greater dispersion around the mean return?   A. ABC B. XYZ     c. Calculate the geometric average returns of each stock. What do you conclude? (Do not round intermediate calculations. Round your answers to 2 decimal places.)           d. If you were equally likely to earn a return of 20%, 8%, 16%, 4%, or 2%, in each year (these are the five annual returns for stock ABC), what would be your expected rate of return? (Do not round intermediate calculations.)           e. What if the five possible outcomes were those of stock XYZ?           f. Given your answers to (d) and (e), which measure of average return, arithmetic or geometric, appears more useful for predicting future performance?   A. Arithmetic B. Geometric

A stock has an expected return of 16.5 percent, its beta is 1.50, and the risk-free rate is 4.5 percent. What must the expected return on the market be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Market expected return             %

Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT? Price Expected growth (constant) Required return X O b) $50 5% 10% Y $50 6% 11% a) Stock Y has a higher dividend yield than Stock X. One year from now, Stock X's price is expected to be higher than Stock Y price. c) Stock X has the higher expected year-end dividend. d) Stock Y has a higher capital gains yield. e) Stock X has a higher dividend vield than Stock V

Investors expect the market rate of return this year to be 16.50%. The expected rate of return on a stock with a beta of 1.5 is currently 24.75%. If the market return this year turns out to be 14.50%, how would you revise your expectation of the rate of return on the stock? (Do not round intermediate calculations. Round your answer to 1 decimal place.)

Conceptual Overview: Explore how stock volatility relates to the beta coefficient b risk measure. The tendency of a stock to move with the market is measured by its beta coefficient. returns 10%. And in a year when the market goes down -10%, the average stock goes down - 10% also. The slope of the line for the average stock is b = 1.0. A more volatile stock would change more extremely. Drag the line vertically so that it has a slope of b 2.0. For this more volatile stock, in a year when the market returned 20%, the volatile stock did better with a 30% return, and when the market lost -10%, the volatile stock lost big with a -30 % change. Now drag the line so that it has a slope ofb = 05. This stop less volatile than the average stock and reacts less extremely than the market, In a year the market returned 20%, the less volatile stock returned slightly less at about 15%. And in a year when the market lost-10%, the less volatile stock did a letter better with When first loaded, the graph…

Stocks A and B have the following probability distributions of expected future returns: profitability A B 0.1 11% 27% 0.2 3 0 0.4 12 20 0.2 24 28 0.1 36 43 Calculate the expected rate of return, , for Stock B ( = 12.70%.) Do not round intermediate calculations. Round your answer to two decimal places.   % Calculate the standard deviation of expected returns, σA, for Stock A (σB = 18.54%.) Do not round intermediate calculations. Round your answer to two decimal places.   % Now calculate the coefficient of variation for Stock B. Do not round intermediate calculations. Round your answer to two decimal places.   Is it possible that most investors might regard Stock B as being less risky than Stock A? If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a portfolio sense. If Stock B is less highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be…

Consider the following information: State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Recession 0.35 0.06 -0.15 Normal 0.40 0.09 0.16 Boom 0.25 0.13 0.36 Calculate the expected return for the two stocks. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Calculate the standard deviation for the two stocks. Note: Do not round your intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.

Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT? Briefly explain your choice. Show work in excel   X Y Price $30 $30 Expected growth (constant) 6% 4% Required return 12% 10%   a. Stock Y has a higher dividend yield than Stock X. b. One year from now, Stock X's price is expected to be higher than Stock Y's price. c. Stock X has the higher expected year-end dividend. d. Stock Y has a higher capital gains yield. e. Stock X has a higher dividend yield than Stock Y.

Required: Investors expect the market rate of return this year to be 19.00%. The expected rate of return on a stock with a beta of 1.2 is currently 22.80%. If the market return this year turns out to be 17.60%, how would you revise your expectation of the rate of return on the stock? (Do not round intermediate calculations. Round your answer to 1 decimal place.) Revised rate of return %

A. If a stock costs $55 one month and drops to $45 the next month, what is the expected stock price the next month, if we assume the stock follows a random walk?  B. Explain both technical and fundamental analysis and what form of the efficient market hypothesis corresponds to each.

Consider the following average annual returns for Stocks A and B and the Market. Which of the possible answers best describes the historical betas for A and B? Years Market Stock A Stock B 1   0.03 0.16 0.05 2 −0.05 0.20 0.05 3   0.01 0.18 0.05 4 −0.10 0.25 0.05 5   0.06 0.14 0.05 a. bA > +1; bB = 0. b. bA = 0; bB = −1. c. bA < 0; bB = 0. d. bA < −1; bB = 1. e. bA > 0; bB = 1.

Suppose your expectations regarding the stock price are as follows: HPR (including dividends) State of the Market Boom Normal growth Recession Probability Ending Price 0.35 0.30 0.35 Mean Standard deviation Use the equations E (r) = Ep (s) r(s) and o² = Ep (s) [r(s) – E(r)]² to compute the mean and standard deviation of the HPR S S on stocks. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. do do $ 140 110 80 % 44.5% 14.0 -16.5 %

A stock has an expected return of 11 percent, its beta is 1.20, and the risk-free rate is 4.4 percent. What must the expected return on the market be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. 12.32% Market expected return

A stock has an expected return of 18.0 percent, a beta of 1.90, and the return on the market is 11.60 percent. What must the risk-free rate be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Risk-free rate

A stock has a beta of 1.15, the expected return on the market is 10.5%, and the risk - free rate is 4.0% . What must the expected return on this stock be? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected return %