Suppose you observe the following situation: Security Pete Corp. Repete Co. Beta Expected Return 1.20 0.130 0.89 0.103 What is the risk-free rate? (Do not round intermediate calculations. Round the final answer to 3 decimal places.) Risk-free rate |% Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Expected Return on Market Pete Corp. Repete Co.

Suppose you observe the following situation: Security Pete Corp. Repete Co. Beta Expected Return 1.20 0.130 0.89 0.103 What is the risk-free rate? (Do not round intermediate calculations. Round the final answer to 3 decimal places.) Risk-free rate |% Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Expected Return on Market Pete Corp. Repete Co.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 14MC

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Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.70 0.180 Repete Col 1.39 0.153 What is the risk-free rate? (Do not round intermediate calculations. Round the final answer to 3 decimal places) Risk-free rate % Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Expected Return on Market Pete Corp. Repete Co.%
Suppose you observe the following situation: Security Beta Expected Return Pete Corp. 1.70 0.180 Repete Co. 1.39 0.153 What is the risk - free rate? (Do not round intermediate calculations. Round the final answer to 3 decimal places.) Risk - free rate % Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Expected Return on Market Pete Corp. % Repete Co. %
Suppose you observe the following situation on two securities:Security Beta Expected Return Pete Corp. 0.8 0.12 Repete Corp. 1.1 0.16 Assume these two securities are correctly priced. Based on the CAPM, what is the return on the market?
Suppose you observe the following situation: Security Ruby Pearl Expected Return 14.9% 21.0% Beta 0.70 2.13 A). If these two securities are correctly priced, calculate the risk-free rate. Round your answer to 4 decimal points. B). If these two securities are correctly priced, find the market risk premium (using the findings of Requirement-A). Round your answer to 4 decimal points. C). If the current market data shows that the risk-free rate is 3.52 percent, are these securities fairly priced? Comment on your answer. Round your answers to 4 decimal points. D). Calculate the expected return and beta of an equally weighted portfolio of these two securities. Round your answers to 3 decimal points.
Given that the formula for CAPM is Expected return= risk free rate + Beta*(Return on market - risk free rate), Security A has a beta of 1.16 and an expected return of .1137 and Security B has a beta of .92 and expected return of .0984. If these securities are assumed to be correctly priced, what is their risk free rate? Based on CAPM, what is the return on the market?
Suppose you observe the following situation: Security Beta Expected Return Peat Company 1.70 13.60 Re - Peat Company 0.85 10.80 Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk - free rate?
Hi, How do i solve this problem using a formula or financial calculator? Two securities, A and B, are available for trading. Prices (at t=0) and future payoffs (at t=1) in bothstates are given in the following table. Assume that both states are equally likely (50% chance of each). There is another security, call it C, whose payoff at t=1 is equal to $300 in the weak state and$600 in the strong state. Find the no-arbitrage price (at t=0) of security C What is the risk-free rate of return in this economy?
You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset: a. Fill in the missing values in the table. (Leave no cells blank - be certain to enter 0 wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) * With the market portfolio b-1. What is the expected return of Firm A? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-2. What is your investment recommendation regarding Firm A for someone with a well-diversified portfolio? multiple choice 1 Buy Sell b-3. What is the expected return of Firm B? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b-4. What is your investment recommendation regarding Firm B for someone with a well-diversified portfolio? multiple choice 2 Sell Buy b-5. What is the expected return of Firm C?…
how to find the current market price of your market portfolio according to No Arbitrage condition? With weights (-0.6906057,1.21794211, 047266359) and expected returns (0.31%,2.1859%,1.4475%), where 0.31% is the risk free rate
Suppose you observed the following situation: Security Beta Expected Return Cooley, Inc. 1.6 19% Moyer Co. 1.2 16% What would the risk-free rate have to be if these securities are correctly priced?
assume that the market consists of two securities. Security A has a market value of $1 billion and a covariance with the market portfolio of 0.15. Security B has a market value of $3 billion and a covariance with the market portfolio of 0.08. What is the standard deviation of the market portfolio?
Suppose the risk-free rate goes up to 7%.What effect would higher interest rates have onthe SML and on the returns required on highrisk and low-risk securities? (2) Suppose insteadthat investors’ risk aversion increased enoughto cause the market risk premium to increase to8%. (Assume the risk-free rate remains constant.)What effect would this have on the SML and onreturns of high- and low-risk securities?