In CAPM and your CAPM Project, the beta of AAPL was computed by regressing the returns of what on what X= Y= Y=S&P500 on X=AAPL ? Y=AAPL on X=Risk free rate Y=AAPL minus the Risk free rate none of the above on X=AAPL minus S&P
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- The SML implies that if you could find an investment with a negative beta, its expected return, E(k), would be: E(k) < 0 E(k) < k f 0 < E(k) < k f kF < E(k) < E(kM)An analyst has modeled the stock of Crisp Trucking using a two-factor APTmodel. The risk-free rate is 6%, the expected return on the first factor (r1) is12%, and the expected return on the second factor (r2) is 8%. If bi1 5= 0.7 andbi2 5= 0.9, what is Crisp’s required return?Assume that an investment is expected to generate the following returns: a 10% chance of a $1,400 return, a 50% chance of a $6,600 return, and a 40% chance of a $1,500 return. What is the expected rate of return on this investment? Note: The solution must be displayed on an Excel sheet using Excel functions such as =PV(...) and =FV(...) etc.
- You observe the following: ABC Inc. has 1.8 Beta and .2 Expected return XYZ Inc has 1.6 Beta and .19 Expected return What would the risk free rate be if ABC and XYZ, were priced correctly?If X-Co has a Beta of 1.6, and the risk-free rate is 4.5%, and the average market risk premium is 6%, what is X-Co’s estimated required return per the CAPM? (show calculations)assume that risk free rate, RF, is currently 8%, the market return, 1m, is 12%, and asset a beta ba, is 1.10. (a) Draw the SML on a set of "non-diversifiable risk Please sent me complete this question for further reliance.
- Assume that the risk-free rate, RF, is currently 9% and that the market return, rm, is currently 16%. a. Calculate the market risk premium. b. Given the previous data, calculate the required return on asset A having a beta of 0.4 and asset B having a beta of 1.8.An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free rate is 6%, the expected return on the first factor (r1) is 12%, and the expected return on the second factor (r2) is 8%. If bi1 = 0.7 and bi2 = 0.9, what is Crisp’s required return?Use the required return-beta equation from the CAPM What is the required return if the risk-free rate is 4%, beta 1.5 and the expected market return 8%? What is the risk-free rate if beta is 1.1, the required return 8.4% and the expected market return 8%? What is beta if the risk-free rate is 4%, the required return 12% and the expected market return 8%? What is the expected market return if the risk-free rate is 4%, beta 1.5 and the required return 12%?
- Given the following probability distributions, what are the expected returns for the Market and for Security J? Statei Pr i rM rJ 1 0.3 −10% 40% 2 0.4 10 −20 3 0.3 30 30 Group of answer choices 10.0%; 11.3% 9.5%; 13.0% 10.0%; 9.5% 10.0%; 13.0% 13.0%; 10.0%You observe the following: ABC Inc. has 1.8 Beta and .2 Expected return ABC Inc. has 1.8 Beta and .2 Expected return XYZ Inc has 1.6 Beta and .19 Expected return If the risk free rate is 6% what are the reward to risk ratios for XYZ Inc?The risk-free rate and the expected market rate of return and 0.056 and 0.125. Using the CAPM model, the expected rate of return of a security, that you are interested in, has a beta of 1.25 would be equal to Calculate the expected rate of return