INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP
13th Edition
ISBN: 9781337817363
Author: Brigham
Publisher: CENGAGE L
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Chapter 3, Problem 1P
The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market return is 20%. If the correlation between Stock A and the market is 0.70, then what is Stock A’s beta?
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The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market return is 20%. If the correlation between Stock A and the market is 0.70, then what is Stock A’s beta?
The correlation coefficient between stock B and the market portfolio is 0.8. The standard deviation of stock B is 24 percent and the standard deviation of the market is 30 percent. Calculate the beta of the stock.
0.64
0.92
0.80
1.00
1.42
. The standard deviation of stock returns for Stock A is 40%. The standard deviation of the market return is 24%. If the correlation between Stock A and the market is 0.90, then what is Stock A's beta? Round your answer to two decimal places.
Chapter 3 Solutions
INTERMEDIATE FINAN.MGMT.(LL)-W/MINDTAP
Ch. 3 - Security A has an expected rate of return of 6%, a...Ch. 3 - The standard deviation of stock returns for Stock...Ch. 3 - APT
An analyst has modeled the stock of Crisp...Ch. 3 - Two-Asset Portfolio
Stock A has an expected return...Ch. 3 - Prob. 4PCh. 3 - You have been hired at the investment firm of...Ch. 3 - You have been hired at the investment firm of...Ch. 3 - You have been hired at the investment firm of...Ch. 3 - You have been hired at the investment firm of...Ch. 3 - You have been hired at the investment firm of...
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- A stock has a market beta of 0.62 and a standard deviation of 0.27. If the market standard deviation is 0.30, what is thecovariance between the stock return and the market return?arrow_forwardStock A has a correlation with the market of 0.53. Assuming that the standard deviation of returns for Stock A is 24.0% and that the standard deviation of returns for the market is 10.0%, what is beta for stock A? A 1.31 B. 1.27 C. 0.17 D. 0.22arrow_forwardA stock has a market beta of 0.86 and a standard deviation of 0.28. If the market standard deviation is 0.30, what is the covariance between the stock return and the market return?arrow_forward
- The market and Stock A have the following probability distributions: Probability Return on market Return on Stock A 0.2 18% 16% 0.3 12% 14% 0.5 10% 11% Calculate the expected rates of return for the market and Stock A. Calculate the coefficient of variation for the market and Stock A (Standard deviation for market is 3.0265% and standard deviation for Stock A is 2.0224%).arrow_forwardStock A has expected return of 15% and standard deviation (s.d.) 20%. Stock B has expected return 20% and s.d. 15%. The two stocks have a correlation coefficient of 0.5. a. Note that Stock A has greater risk (s.d.) that Stock B, but a lower expected return. Explain how is this possible in a world where returns on assets are as predicted by the CAPM. The beta of stock A is 1 and the beta of stock B is 1.5. What is the risk premium on the market portfolio, if the CAPM holds ?arrow_forwardThe standard deviation of stock A's returns (σA) is 34%, and the standard deviation of the market portfolio (σM) is 19%. What is the beta of stock A (βA) if the correlation between stock A returns and market portfolio returns is 0.75? Round answer to the nearest hundredth, as in "0.12"arrow_forward
- The return on Stock A is 20%, 10%, and -25% when the market condition is good, normal, and bad, respectively. The return on Stock B is 50%, 10 %, and -30% when the market condition is good, normal, and bad, respectively. If the probability of good economy, normal economy, and i bad economy is 20%, 40%, and 40 % , respectively, find the covariance between the returns of Stock A and Stock B. Select the choice that is closest to your answer. 0.02 -0.02 -0.0544 0.0544arrow_forwardSuppose you estimate that the correlation between Abercrombie and Fitch (ANF) stock returns with market portfolio returns is 0.85. You also estimate that ANF's stock return's are twice as variable (σANFσM=2.0). Therefore, what is the the beta for ANF stock (βANF) ?arrow_forwardThere is a 29.20% probability of a below average economy and a 70.80% probability of an average economy. If there is a below average economy stocks A and B will have returns of -9.50% and 15.70%, respectively. If there is an average economy stocks A and B will have returns of 6.00% and 5.00%, respectively. Compute the: Expected Return for Stock A: Expected Return for Stock B: Standard Deviation for Stock A: Standard Deviation for Stock B: ** please try to make it easy to understand so I can learn from it, thank youarrow_forward
- Assume that the CAPM holds. One stock has an expected return of 10% and a beta of 0.6. Another stock has an expected return of 11% and a beta of 1.5. What is the expected return on the market?arrow_forwardThe standard deviation of returns of a particular stock is 43% and that of the market is 35%. The coefficient of correlation between the returns of the stock and that of the market is 0.25. The real risk-free rate is 2% and the expected inflation rate is 1.5%. What is the stock's contribution to risk (beta)? O 1.23 3.26 0.31 ○ 0.81 0.20arrow_forwardA stock has an expected return (rs) of 10.4%, the risk-free rate (TRF) is 1.7%, and market risk premium (M-TRF) is 8.3%. What is this stock's Beta? Enter your answer as a number with two decimal places of precision (i.e. 1.23)arrow_forward
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