An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 9%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 5.9%. If ai = 0, bi = 1.2, ci = -0.4, and di = 1.3, what is the stock's predicted return? Round your answer to two decimal places.  %

Q: Suppose Autodesk stock has a beta of 2.20, whereas Costco stock has a beta of 0.72. If the risk-free…

A: Portfolio Return is that under which investor will invest his money in more than one stock of the…

Q: Suppose Intel stock has a beta of 0.81, whereas Boeing stock has a beta of 1.11. If the risk-free…

A: Here, Beta of I Stock is 0.81 Beta of B Stock is 1.11 Risk Free Interest Rate is 5.2% Expected…

Q: Assume that stock market returns have the market index as a common factor, and that all stocks in…

A: a) Expected profit (in dollar) =[$1,000,000 *( 0.025+1.6*Rm)] - [$1,000,000 * (-0.025 +1.6*Rm)]

Q: ASsume the following data for a stock: Beta 15, risk-free rate = 4 percent, market rate of return 12…

A:

Q: Assume that stock market returns have the market index as a common factor, and that all stocks in…

A: a) The investor shorts ten equally weighted negative alpha stocks and invests $1 million in ten…

Q: A stock has a beta of 1.19 and an expected return of 11.27 percent. If the risk-free rate is 3.4…

A: Given: Beta = 1.19 Expected return = 11.27% Risk free rate = 3.4%

Q: You estimate that the expected return of SPY stock is 15%, and standard deviation of the stock is…

A: Investors use these estimates of expected return and standard deviation of a portfolio to determine…

Q: The current risk-free rate of return, rRF, is 2 percent and the market risk premium, RPM, is 8…

A: Risk free rate = 2% Marker risk premium = 8% Beta = 1.40

Q: The following are estimates for two stocks.   Stock Expected Return Beta Firm-Specific Standard…

A: Here, Standard Deviation of Market is 22% Risk-free rate is 11% Expected Return, Beta and…

Q: An analyst has modeled the stock of a company using the Fama-French three-factor model. The market…

A: Computation:

Q: Wilson is now evaluating the expected performance of two common stocks, Furhman Labs Inc. and Garten…

A: The question is based on the concept of capital asset pricing model (CAPM) , the model used to…

Q: Historical nominal returns for Coca-Cola have been 8% and -20%. The nominal returns for the market…

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Calculate covariance and coefficient of correlation between the returns of the stocks A and B.

A: Covariance is calculated by analyzing at-return surprises (standard deviations from the expected…

Q: Suppose MegaChip has a beta of 1.3, whereas Littlewing stock has a beta of .7. If the risk-free…

A: Given the following information: Beta of MegaChip: 1.3 Beta of Littlewing: 0.7 Risk free rate: 4%…

Q: Taggart Inc.'s stock has a 50% chance of producing a 36% return, a 30% chance of producing a 10%…

A: Expected rate of return = Sum of probability * Returns

Q: According to the CAPM, what is the required rate of return for a stock with a beta of 0.7, when the…

A: To calculate the required rate of return we use the below formula   Required rate of return = Risk…

Q: Please help me with 11-7 ??‍♀️

A: Required rate of return E( R ) can be calculated using Capital Asset Pricing Model (CAPM) as below:

Q: Forecast Returns, Standard Deviations, and Betas Forecast Return Standard Deviation Beta Low β stock…

A: Expected return for each stock- = Rf+ beta (Rm-Rf) Stock X= 0.05+ 0.8x (0.14-0.05) = 12.20% Stock Y=…

Q: Consider the following probability distribution for stocks A and B:    State   Probability…

A: We can calculate expected return and standard deviation by using following formulas Expected return…

Q: Calculate the expected (required) return for each of the following stocks when the risk-free rate is…

A: With the given information, we can determine the expected return as:

Q: An analyst has modeled the stock of a company using the Fama-French three-factor model. The market…

A: Market return is 12% return on the SMB portfolio (rSMB) is 2.1%  return on the HML portfolio (rHML)…

Q: Fama-French Three-Factor Model An analyst has modeled the stock of a company using the Fama-French…

A: Calculation of stock’s predicted return:In this problem risk free rate is not given, so we can…

Q: Given the following information, use the CAPM to calculate the beta of the stock. The required rate…

A: Capital Asset Pricing Model CAPM model shows the relationship between the expected return and risk…

Q: Assume that stock market returns have the market index as a common factor, and that all stocks in…

A: Part a: The total number of stocks is 20. To build a zero investment portfolio, 10 stocks are sold…

Q: for next The risk-free rate, re is 9%. Your probability distribution for rM year is as follows:…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Fisher Co.'s stock has a beta of 1.40, the risk-free rate is 4.25%, and the market risk premium is…

A: Required rate of return is defined as the minimum return to the investor, where he will going to…

Q: ZR Corporation’s stock has a beta coefficient equal to 1.8 and a required rate of return equal to 16…

A: Beta =1.8 Required return =16% Market return =10%

Q: Dothan Inc.'s stock has a 25% chance of producing a 16% return, a 50% chance of producing a 12%…

A: Formula: Expected return =∑Chance ×return

Q: Landon Stevens is evaluating the expected performance of two common stocks, Furhman Labs, Inc., and…

A: according to CAPM MODEL: RS=RF+BETA×RM-RFwhere,RF=risk free rateRM=market returnRS=expected return…

Q: estimate the standard deviations of Stocks A and B. Then, compute the expected return, standard…

A: a) Standard deviation of A= (Beta2*Market SD2+Firm-specific SD2)(1/2)…

Q: Assume that the CAPM holds. Assume also that the expected return on the market portfolio is 10%. If…

A: Expected Return = Risk free rate + Beta ( Market Return - Risk Free Return)

Q: y where the risk-free interest rate is 19% and the expected return of the market is 25%, the beta…

A: A. The expected returns can be calculated as follows : Calculations for above :

Q: Suppose Autodesk stock has a beta of 2.17​, whereas Costco stock has a beta of 0.71. If the​…

A: Autodesk beta = 2.17 Costco beta = 0.71 Risk free rate = 6% Market return = 11.5% Autodesk weight =…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: The measure of amount of variation of a set of values is called as standard deviation. It is the sum…

Q: ants, Inc. common stock has a beta of 0.90, while Acme Dynamite Company common stock has a beta of…

A: The given problem relates to Capital asset pricing model. As per Capital asset pricing model,…

Q: Stock R has a beta of 1.7, Stock S has a beta of 0.8, the required return on an average stock is…

A: The question is based on the concept of the capital asset pricing model (CAPM). CAPM explains the…

Q: a. You expect an RFR of 10 percent and the market return (RM) of 14 percent. Compute the expected…

A: Part (a)RFR = 10%The market return, RM =  14%The expected return for a stock using CAPM equation is:…

Q: Suppose Autodesk stock has a beta of 2.10, whereas Costco stock has a beta of 0.72. If the risk-free…

A: Portfolio beta = weighted average beta of the stocks it consists

Q: JaiLai Cos. stock has a beta of 0.6, the current risk-free rate is 6.0 percent, and the expected…

A: The following information has ben provided in the question: Beta =0.6 Risk free rate =6% Expected…

Q: A stock has a beta of 1.23, the expected return on the market is 11.9 percent, and the risk-free…

A: the expected return on this stock = risk free rate + beta*market risk premium

Q: The expected rate of return for the stock of Cornhusker Enterprises is 20 percent, with a standard…

A: Expected return: The return anticipated by investor from his investment is called expected return.…

Q: Consider the following two scenarios for the economy and the expected returns in each scenario for…

A: Beta of Stock = Change in Rate of Return of Stock / Change in Market return Therefore, Beta of Stock…

Q: Everrest Inc.'s stock has a 39% chance of producing a 12.50% return, a 28% chance of producing a…

A: Expected return from the stock is given by E(R) as shown on whiteboard. Here, pi is the probability…

Stock Market Indices

Stock indexes are used to compare the price fluctuations of a group of stocks of similar companies, which are combined based on a similar industry or a particular market capitalization limit or type of market. The price comparison is based on a pre-determined standard method or indicators. These stock indexes are usually considered a base for comparison of a particular stock, and the performance of that particular company can be easily determined.