Homework Help is Here – Start Your Trial Now!
Business
Accounting
PART ONE Assume that you have the following investment alternatives are at your disposal, shown with their probabilities and associated outcomes. Condition of economy Probability Treasury Bill Nyundo Ltd Mwila Ltd Recession 0.1 8.0% -22% 10% Below average 0.2 8.0% -2% -10% Average 0.4 8.0% 20% 7.0% Above average 0.2 8.0% 35% 45% Boom 0.1 8.0% 50% 30% Required: 1. Compute the correlation coefficient. 2. Construct the security market line. Fill in your answers ONLY in this table. Round answers to 2 decimal places. This table must be submitted (any student who doesn't submit this table with only answers rounded to 2 decimal places will get zero) The Risk Free Rate is 0.5% for every state of the economy. Probability Stock A Stock B Market Portfolio Recession 0.1 -22% 28% -13% Below average 0.2 -2% 14.7% 1% Average 0.4 20% 0% 15% Above average 0.2 35% -10% 29% Boom 0.1 50% -20% 43% ER ? 1.74% 15% Variance () 401.44 ? 235.20 CV ? ? ? Beta (ẞ) 1.3 -0.87 ? S Measure ? ? ? T Measure ? ? ? WEATHER HAND WRITTEN OR TYPED THIS TABLE MUST BE INCLUDED IN YOUR SUBMITTED DOCUMENT AS INSTRUCTED ABOVE SHOW ALL CALCULATIONS BELOW

PART ONE Assume that you have the following investment alternatives are at your disposal, shown with their probabilities and associated outcomes. Condition of economy Probability Treasury Bill Nyundo Ltd Mwila Ltd Recession 0.1 8.0% -22% 10% Below average 0.2 8.0% -2% -10% Average 0.4 8.0% 20% 7.0% Above average 0.2 8.0% 35% 45% Boom 0.1 8.0% 50% 30% Required: 1. Compute the correlation coefficient. 2. Construct the security market line. Fill in your answers ONLY in this table. Round answers to 2 decimal places. This table must be submitted (any student who doesn't submit this table with only answers rounded to 2 decimal places will get zero) The Risk Free Rate is 0.5% for every state of the economy. Probability Stock A Stock B Market Portfolio Recession 0.1 -22% 28% -13% Below average 0.2 -2% 14.7% 1% Average 0.4 20% 0% 15% Above average 0.2 35% -10% 29% Boom 0.1 50% -20% 43% ER ? 1.74% 15% Variance () 401.44 ? 235.20 CV ? ? ? Beta (ẞ) 1.3 -0.87 ? S Measure ? ? ? T Measure ? ? ? WEATHER HAND WRITTEN OR TYPED THIS TABLE MUST BE INCLUDED IN YOUR SUBMITTED DOCUMENT AS INSTRUCTED ABOVE SHOW ALL CALCULATIONS BELOW

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter15: Capital Structure Decisions
Section: Chapter Questions
Problem 12SP
See similar textbooks
icon
Related questions
Question
PART ONE Assume that you have the following investment alternatives are at your disposal, shown with their probabilities and associated outcomes. Condition of economy Probability Treasury Bill Nyundo Ltd Mwila Ltd Recession 0.1 8.0% -22% 10% Below average 0.2 8.0% -2% -10% Average 0.4 8.0% 20% 7.0% Above average 0.2 8.0% 35% 45% Boom 0.1 8.0% 50% 30% Required: 1. Compute the correlation coefficient. 2. Construct the security market line. Fill in your answers ONLY in this table. Round answers to 2 decimal places. This table must be submitted (any student who doesn't submit this table with only answers rounded to 2 decimal places will get zero) The Risk Free Rate is 0.5% for every state of the economy. Probability Stock A Stock B Market Portfolio Recession 0.1 -22% 28% -13% Below average 0.2 -2% 14.7% 1% Average 0.4 20% 0% 15% Above average 0.2 35% -10% 29% Boom 0.1 50% -20% 43% ER ? 1.74% 15% Variance () 401.44 ? 235.20 CV ? ? ? Beta (ẞ) 1.3 -0.87 ? S Measure ? ? ? T Measure ? ? ? WEATHER HAND WRITTEN OR TYPED THIS TABLE MUST BE INCLUDED IN YOUR SUBMITTED DOCUMENT AS INSTRUCTED ABOVE SHOW ALL CALCULATIONS BELOW
Transcribed Image Text:PART ONE Assume that you have the following investment alternatives are at your disposal, shown with their probabilities and associated outcomes. Condition of economy Probability Treasury Bill Nyundo Ltd Mwila Ltd Recession 0.1 8.0% -22% 10% Below average 0.2 8.0% -2% -10% Average 0.4 8.0% 20% 7.0% Above average 0.2 8.0% 35% 45% Boom 0.1 8.0% 50% 30% Required: 1. Compute the correlation coefficient. 2. Construct the security market line. Fill in your answers ONLY in this table. Round answers to 2 decimal places. This table must be submitted (any student who doesn't submit this table with only answers rounded to 2 decimal places will get zero) The Risk Free Rate is 0.5% for every state of the economy. Probability Stock A Stock B Market Portfolio Recession 0.1 -22% 28% -13% Below average 0.2 -2% 14.7% 1% Average 0.4 20% 0% 15% Above average 0.2 35% -10% 29% Boom 0.1 50% -20% 43% ER ? 1.74% 15% Variance () 401.44 ? 235.20 CV ? ? ? Beta (ẞ) 1.3 -0.87 ? S Measure ? ? ? T Measure ? ? ? WEATHER HAND WRITTEN OR TYPED THIS TABLE MUST BE INCLUDED IN YOUR SUBMITTED DOCUMENT AS INSTRUCTED ABOVE SHOW ALL CALCULATIONS BELOW
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Corporate Fin Focused Approach
Corporate Fin Focused Approach
Finance
ISBN:
9781285660516
Author:
EHRHARDT
Publisher:
Cengage
SEE MORE TEXTBOOKS