You are analyzing a stock that has a beta of 1.65 over the past year. If the stock market goes down 3% next month, what can you expect from the stock you're analyzing to do based upon the beta?
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You are analyzing a stock that has a beta of 1.65 over the past year. If the stock market goes down 3% next month, what can you expect from the stock you're analyzing to do based upon the beta?
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- A stock with a beta of 1.5 has an expected rate of return of 15%. If the market return this year turns out to be 7 percentage points below expectations, what is your best guess as to the rate of return on the stock?A stock with a beta of 1.6 has an expected rate of return of 15%. If the market return this year turns out to be 7 percentage point below expectations, what is your best guess as to the rate of return for this stockCalculate the Beta of a stock that has annual returns of 18%, -10%, 16%, while the market (X-variable) has corresponding annual returns of 20%, -5%, 10% during each of these three years. (Hint: Your calculator should generate an average value of 8% for the stock = Y, if not re-check your data register).
- A stock recently has been estimated to have a beta of 1.24:a. What will a beta book compute as the “adjusted beta” of this stock?b. Suppose that you estimate the following regression describing the evolution of beta over time:βt = .3 + .7βt−1What would be your predicted beta for next year?You have been following a stock for 6 months and the following is its past return Year 1: -5% Year 2: -10% Year 3: 15% Year 4: 5% Year 5: 10% Year 6: 15% What is the expected return and standard deviation of the stock based on the historical data? Assume normal distribution, what is VaR at 5% for this stock? What is the Sharpe ratio of the stock based on historical data, risk free rate is 1%?During the last four years, you owned two stocks that have had the following annual rates of return. Year KEX KW 2014 0.13 -0.08 2015 0.05 0.21 2016 0.07 0.06 2017 0.09 0.15 Compute the arithmetic mean annual return for EACH stock Compute the standard deviation of the annual rate of return for EACH stock Taking the results of (i) and (ii) into consideration, which stock is preferable? Why? Compute the geometric mean annual return for EACH stock
- A stock with a beta of 1.8 has an expected rate of return of 16%. If the market return this year turns out to be 6 percentage points below expectations, what is your best guess as to the rate of return on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)Using 25 years of data, you estimate the arithmetic average return for a certain stock to be 5.5% and the geometric average return to be 4.6%. Using Blume's formula, what is your average forecasted return over a 5 year period?Stock ABC has a beta of 1.25 and stock XYZ has a beta of 0.55. Which stock would you buy if you knew the stock market was going to drop by 20% over the next month?
- The shares of Google are expected to generate the following possible returns over one year. Return Probability -4% 0.25 10% 0.25 7% 0.25 20% 0.25 If the stock is trading today for 20$ per share. What is the expected price in one year?You are given the following returns on "the market" and Stock F during the last three years. We could calculate beta using data for Years 1 and 2 and then, after Year 3, calculate a new beta for Years 2 and 3. How different are those two betas, i.e., what's the value of beta 2 - beta 1? (Hint: You can find betas using the Rise-Over-Run method, or using your calculator's regression function.) Year Market Stock F 1 6.10% 19.50% 2 12.90% −3.70% 3 16.20% 21.71% A. 10.96 B. 10.91 C. 11.06 D. 11.01 E. 11.11 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Suppose that you are a trader at the stock market.T-Mobile’s stocks currently trade at $45 and the expectedreturn is 9%. You have information that leads you to believethat by the end of year the company’s returns will bearound 40%. Are your expectations optimal? How will yourbehavior influence the stock price?
