CAPM
CAPM
1 Calculate the expected return for A Industries which has a beta of 1.75 when the risk free rate is 0.03 and you expect the market return to be 0.11.
2 Calculate the expected return for B Services which has a beta of 0.83 when the risk free rate is 0.05 and you expect the market return to be 0.12.
3 Calculate the expected return for C Inc. which has a beta of 0.8 when the risk free rate is 0.04 and you expect the market return to be 0.12.
4 Calculate the expected return for D Industries which has a beta of 1.0 when the risk free rate is 0.03 and you expect the market return to be 0.13.
5 Calculate the expected return for E Services which has a beta of 1.5 when the risk free rate is 0.05 and you expect the market return to be 0.11.
6 Calculate the expected return for F Inc. which has a beta of 1.3 when the risk free rate is 0.06 and you expect the market return to be 0.125.
USE THE FOLLOWING INFORMATION FOR THE NEXT FIVE PROBLEMS
Rates of Return Year RA Computer Market Index
1 13 17
2 9 15
3 -11 6
4 10 8
5 11 10
6 6 12
7 Compute the beta for RA Computer using the historic returns presented above.
8 Compute the correlation coefficient between RA Computer and the Market Index.
9 Compute the intercept of the characteristic line for RA Computer.
10 The equation of the characteristic line for RA is
11 If you expected return on the Market Index to be 12%, what would you expect the return on RA Computer to be?
USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS
You expect the risk-free rate (RFR) to be 3 percent and the market return to be 8 percent. You also have the following information about three stocks. CURRENT EXPECTED EXPECTED STOCK BETA PRICE PRICE DIVIDEND X 1.25 $ 20 $ 23 $ 1.25 Y 1.50 $ 27 $ 29 $ 0.25 Z 0.90 $ 35 $ 38 $ 1.00
12 What are the expected (required) rates of return for the three stocks (in the order X, Y, Z)?
13 What are the
1 Calculate the expected return for A Industries which has a beta of 1.75 when the risk free rate is 0.03 and you expect the market return to be 0.11.
2 Calculate the expected return for B Services which has a beta of 0.83 when the risk free rate is 0.05 and you expect the market return to be 0.12.
3 Calculate the expected return for C Inc. which has a beta of 0.8 when the risk free rate is 0.04 and you expect the market return to be 0.12.
4 Calculate the expected return for D Industries which has a beta of 1.0 when the risk free rate is 0.03 and you expect the market return to be 0.13.
5 Calculate the expected return for E Services which has a beta of 1.5 when the risk free rate is 0.05 and you expect the market return to be 0.11.
6 Calculate the expected return for F Inc. which has a beta of 1.3 when the risk free rate is 0.06 and you expect the market return to be 0.125.
USE THE FOLLOWING INFORMATION FOR THE NEXT FIVE PROBLEMS
Rates of Return Year RA Computer Market Index
1 13 17
2 9 15
3 -11 6
4 10 8
5 11 10
6 6 12
7 Compute the beta for RA Computer using the historic returns presented above.
8 Compute the correlation coefficient between RA Computer and the Market Index.
9 Compute the intercept of the characteristic line for RA Computer.
10 The equation of the characteristic line for RA is
11 If you expected return on the Market Index to be 12%, what would you expect the return on RA Computer to be?
USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS
You expect the risk-free rate (RFR) to be 3 percent and the market return to be 8 percent. You also have the following information about three stocks. CURRENT EXPECTED EXPECTED STOCK BETA PRICE PRICE DIVIDEND X 1.25 $ 20 $ 23 $ 1.25 Y 1.50 $ 27 $ 29 $ 0.25 Z 0.90 $ 35 $ 38 $ 1.00
12 What are the expected (required) rates of return for the three stocks (in the order X, Y, Z)?
13 What are the