The following are estimates for two stocks.   Stock Expected Return Beta Firm-Specific Standard Deviation A 12 0.85 32%         B 18 1.40 48%             The market index has a standard deviation of 22% and the risk-free rate is 11%. a. What are the standard deviations of stocks A and B? (Do not round intermediate calculations. Round your answers to 2 decimal places.)   b. Suppose that we were to construct a portfolio with proportions:       Stock A 0.35 Stock B 0.40 T-bills 0.25     Compute the expected return, standard deviation, beta, and nonsystematic standard deviation of the portfolio. (Do not round intermediate calculations. Enter your answer for Beta as a number, not a percent. Round your answers to 2 decimal places.)

Q: A stock has an expected return of 12.5 percent and a beta of 1.16, and the expected return on the…

A: Expected return of stock (Er) = 0.125 (12.5%) Beta (b) = 1.16 Expected return on the market (Rm) =…

Q: Stock R has a beta of 1.9, Stock S has a beta of 0.35, the expected rate of return on an average…

A: Expected Rate of return on average stock = Risk free Rate + beta * Market risk premium 9% = 7% + 1 *…

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: A stock has a beta of 1.07, the expected return on the market is 10.1 percent, and the risk- free…

A: Beta = 1.07 Market return = 10.1% Risk free rate = 4.9%

Q: Consider the following stocks. Stock Expected return Std. Deviation Beta A 15.9% 27.8% 0.93…

A: Sharpe ratio = (Expected return - Risk free rate of return) / Standard deviation

Q: The standard deviation of stock A's returns (σA) is 34%, and the standard deviation of the market…

A: Standard deviation of stock A's returns (σA) is 34% Standard deviation of the market portfolio (σM)…

Q: Stocks A and B have the following probability distributions of expected future returns: Probability…

A: Since question involves multiple subparts , we will answer 1st sub 3 parts for you as per prescribed…

Q: Consider the following information: Probability of State of Economy 0.54 0.46 State of Rate of…

A: Expected return refers to the anticipated amount of profit or loss that an investor calculates from…

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

A: Given information: Beta of stock A is 0.50 Beta of stock B is 0.70

Q: which stocks should be chosen? (round final answer 2 decimal places) Coefficient of variance of…

A: Coefficient of variance = Standard Deviation / Expected Return It shows the standard deviation per…

Q: A stock has a beta of 1.32, the expected return on the market is 10 percent, and the risk-free rate…

A: A stock is a financial instrument issued by a corporation to obtain equity funds. The required rate…

Q: 3. The data below describe a three-stock financial market that satisfies the single-index model:…

A: We will apply the required formula to calculate the required output. Return can be calculated by…

Q: The following three stocks are available in the market:      E(R) β   Stock A 10.9 % 1.18…

A: Given the following information Expected return of Stock A: 10.9%Beta of Stock A: 1.18 Expected…

Q: A small market consists of three stocks, A, B, and C. and their financial data and projection are…

A: a) Computation:

Q: A stock has an expected return of 14.2 percent, the risk-free rate is 6.5 percent, and the market…

A: Given: Expected return = 14.2% Risk free rate = 6.5% Market risk premium = 7.7%

Q: Stock Number of shares Stock Price Beta A 750 33 1.2 В 220 51 0.8 460 19 1.4 Economic condition…

A: Since only part b is required, the answer for part b is provided as per given instructions.

Q: Consider the following information for stocks A, B, and C. The returns on the three stocks are…

A: Given is the  information for the stocks A, B, and C. Stock Expected Return Standard Deviation…

Q: Stocks A and B have the following probability distributions of expected future returns:…

A: 1.) Computation of the expected rate of return of stock A: Hence, the expected return of stock A is…

Q: A stock has a beta of 1.10, the expected return on the market is 12 percent, and the risk-free rate…

A: Given that the expected return on the market is 12%, risk free rate is 3.6% and the beta is 1.10, we…

Q: The following three stocks are available in the market:   E(R) Beta Stock A 11.3% 1.22 Stock B…

A: Given the following information Expected return of Stock A: 11.3%Beta of Stock A: 1.22 Expected…

Q: A stock has a beta of 1.1, the expected return on the market is 10.4 percent, and the risk-free rate…

A: Expected return = Risk free rate+Beta*(Market return-Risk free rate) Where Risk free rate = 4.75%…

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

A: From the equation of return for A and B: Beta of A = 1.25 Beta of B = 1.60 Standard deviation of…

Q: From the following information calculate Beta for stock A, required return of stock A as per CAPM…

A: In this we have to calculate the Beta of stock and from that get required rate.

Q: A small market consists of three stocks, A, B, and C. and their financial data and projection are…

A: Computation:

Q: CAPM, PORTFOLIO RISK. AND RETURN Consider the following information for Stocks X, Y, and Z. The…

A: Note : As per our guidelines, we can only answer up to 3 subparts only. Please post other parts…

Q: Stock R has a beta of 1.4, Stock S has a beta of 0.95, the expected rate of return on an average…

A: The required return of the stock is calculated using the Capital asset pricing model(CAPM ).    The…

Q: Consider the following information about two stocks (D and E) and two common risk factors (1 and 2):…

A: Data given: Stock D:: E(R)=12.46% Common risk factor :: bi1 =0.7 and    b i2=3.7 Stock E::…

Q: A stock has an expected return of 14 percent, a beta of 1.65, and the expected return on the market…

A: Given that the expected return on a stock is 14%, expected return on the market is 11.2% and the…

Q: Stock A has a beta of 1.2 and a standard deviation of 20%. Stock B has a beta of 0.8 and a standard…

A: Given: Particulars Beta Amount Stock A 1.2  $ 100,000 Stock B 0.8  $ 100,000      $ 200,000

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

A: The beta of A is 0.45 Beta of B is 1 The SD of A is 0.28 SD of B is 0.21 SD of market is 16%. Weight…

Q: Consider the following information on Stocks A, B, C and their returns (in decimals) in each state:…

A: Expected return of portfolio:

Q: A stock has an expected return of 15.6 percent, the risk-free rate is 6.2 percent, and the market…

A: Information Provided: Expected Return = 15.6% Risk-free rate = 6.2% Market Risk Premium = 7.7%

Q: A certain stock has a beta of 1.2. If the risk-free rate of return is 4.5 percent and the market…

A: Risk-free return = 4.5% Market risk premium = 8% a) Beta = 1.2 b) Beta = 1.08 CAPM formula: Expected…

Q: tfolio P has a beta of 1.0.

A: The beta of the portfolio refers to the weighted sum of the assets of the company according to the…

Q: 1. The following table presents the expected returns of three stocks and the risk free rate. Stock A…

A: Portfolio means a bunch of assets or investments. To reduce the risk, investors invest their funds…

Q: Stocks A and B have the following returns: Stock A Stock B 1 0.09 0.06 2 0.05 0.02 0.13 0.05 4 -…

A: A combination of the different types of funds and securities for the investment is term as the…

Q: Stock A has an expected return of 12% and a standard deviation of 35%. Stock B has an expected…

A: Expected return on portfolio is the weighted average return on stocks in the portfolio and can be…

Q: stock has a beta of 1.14, the expected return on the market is 10.8 percent, and the risk-free rate…

A: Beta=1.14 Return is market =10.8% Risk free rate =4.55%

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

A: The expected return is the return of the portfolio which is the sum of each potential return that is…

Q: ns for stocks A, B, C, D, and E are 7 %, 10%, 12%, 25%, and 18% respectively. The corresponding…

A: Security with the lowest coefficient of variation shall be least risky. Coefficient of variation =…

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

A:

Q: Consider two stocks, Stock D, with an expected return of 13 percent and a standard deviation of 27…

A: Minimum variance portfolio is calculated by this formula: σ stands for standard deviation, ρ stands…

Q: A stock has a beta of 1.2, the expected return on the market is 9 percent, and the risk-free rate is…

A: We need to use CAPM to calculate expected return Expected return =Risk free rate +Beta(Market return…

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

A: Given information: Beta of stock A is 1.30 Beta of stock B is 1.60

Q: Consider the following table, which gives a security analyst's expected return on two stocks in two…

A: Beta is a measure of risk on the particular stock compared to the whole market or portfolio. Beta…

Q: A stock has a beta of 1.2, the expected return on the market is 9 percent, and the risk-free rate is…

A: Given, Beta =1.2 Expected Market Return = 9% Risk Free rate = 1.5%   Formula to be used : CAPM…

Q: Stocks A and B have the following probability distributions of expected future returns: Probability…

A: Here: Probability     A B 0.1 (11%) (38%) 0.2 5% 0% 0.5 13% 21% 0.1 18% 26% 0.1 31% 36%

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

A: We know that, Beta of Stock = correlation*Standard Deviation of Stock/Standard Deviation of Market…