Risk Swan's Sportswear plans to launch a line of designer jeans with the help of one well-known designer. Because of the highly competitive nature of the industry, theline of jeans has been given a code name, Stretch. Swan's market research has established a forecast shown in the following table. E. Use the table to calculate theaverage return for the line.The average return for the line is%. (Enter as a percentage and round to two decimal places.)(Click on the icon here a in order to copy the contents of the data table belowinto a spreadsheet.)Market acceptance ProbabilityVery poorAnnual rate of return0.08- 0.017Poor0.190.0390.460.074ageGood0.180.115Excellent0.090.166 Interpreting beta A firm wishes to assess the impact of changes in the market return on an asset that has a beta of 1.1.a. If the market return increased by 17%, what impact would this change be expected to have on the asset's return?b. If the market return decreased by 5%, what impact would this change be expected to have on the asset's return?c. If the market return did not change, what impact, if any, would be expected on the asset's return?d. Would this asset be considered more or less risky than the market?a. If the market return increased by 17%, the impact on the asset's return is%. (Round to one decimal place. Enter a negative percentage number if the asset return decreases.)b. If the market return decreased by 5%, the impact on the asset's return is%. (Round to one decimal place. Enter a negative percentage number if the asset retum decreases.)c. If the market return did not change, the impact on the asset's return is %. (Round to one decimal place. Enter a negative percentage number if the asset return decreases.)d. Would this asset be considered more or less risky than the market? (Select from the drop-down menus.)The asset isthe market portfolio, which has a beta of

Average Return: The average return is computed by summing the product of the security probability…

Answered: The average return for the line is %.…

Business

Finance

The average return for the line is %. (Enter as a percentage and round to two decimal places.)

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 4P: Investment advisors estimated the stock market returns for four market segments: computers,...

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