Return 0 [Ch 13] Use the information provided in the graph to answer the next three problems. 4 2 20 18- 16 14- 12- 10 8 6 SML 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 Beta 22. What is the risk-free rate of return? (to nearest 0.1%) % 23. What is the market risk premium? (to nearest 0.1%) %

Assuming your utility function U = E(r) - Ao². Consider the investments shown in the table. If your risk aversion coefficient is -2, which investment would you choose? Investment E[r] #1 #2 #3 #4 #2 #3 #4 #1 12% 15% 15% 24% σ 40% 40% 30% 40%

Using the SML [LO4] Asset W has an expected return of 11.8 percent and a beta of 1.15. If the risk-free rate is 3.7 percent, complete the following table for portfolios of Asset W and a risk-free asset. Illustrate the relationship between portfolio expected return and portfolio beta by plotting the expected returns against the betas. What is the slope of the line that results? Percentage of Portfolio in Asset W 0% 25 50 75 100 125 150 Portfolio Expected Return Portfolio Beta

E (R) 15.5% 5% 1.5 SML B (a) What is the Expected Return for a security with a Beta of 1.2?

use attachment to answer questions This question relates to Diagram 1 from the  9.4 diagrams, which shows the Security Market Line. What is the expected return on the market?   Select one: a. 20% b. 10% c. 15% d. 5%

Given the following probability distributions, what are the expected returns for the Market and for Security J? Statei Pr i rM rJ 1 0.3 −10% 40% 2 0.4 10 −20 3 0.3 30 30

Sheet 5 Use Sheet 5 to complete the following Date AMZN Return BAC Return Market Return Risk-Free Return   AMZN Excess Return* BAC Excess Return* Market Excess Return* 3/1/2017 0.05 -0.04 0.04 0.0050   0.04 -0.05 0.03 4/1/2017 0.04 -0.01 0.00 0.0050   0.04 -0.02 -0.01 5/1/2017 0.08 -0.04 0.01 0.0050   0.07 -0.04 0.00 6/1/2017 -0.03 0.08 0.01 0.0050   -0.03 0.08 0.01 7/1/2017 0.02 -0.01 0.00 0.0050   0.02 -0.01 0.00 8/1/2017 -0.01 -0.01 0.02 0.0050   -0.01 -0.01 0.01 9/1/2017 -0.02 0.06 0.00 0.0050   -0.02 0.06 0.00 10/1/2017 0.15 0.08 0.02 0.0050   0.14 0.08 0.01 11/1/2017 0.06 0.03 0.02 0.0050   0.06 0.02 0.02 12/1/2017 -0.01 0.05 0.03 0.0050   -0.01 0.04 0.02 1/1/2018 0.24 0.08 0.01 0.0050   0.24 0.08 0.00 2/1/2018 0.04 0.00 0.06 0.0050   0.04 0.00 0.05…

Suppose you have the follow information about Intrinsic Co. and the market. What is the Beta of Intrinsic Co.? Probability 0.48 0.35 0.17 a) 1.39 Ob) 1.13 c) 1.00 d) 1.26 Intrinsic Co. Returns 15.4% 17.9% 21.5% Market Returns 9.1% 10.8% 13.5%

Example of CAPM Equation: Case Risk free Rate (Rf) Market return (Km) Beta (b)  Required Return A 5% 8% 1.30 ? B 8% 13% 0.90 ? C 10% 15% -0.20% ? D ? 12% 1.0 12% E 6% ? 0.60 9% F 5% 16% ? 10% Required: Using CAPM equation, compute the missing value (?)

portfolio.. - Word **** References Mailings Review View Help RCM Acrobat Foxit Reader PDF Foxit PDF 5. The risk-free rate and the expected market rate of return are 0.04 and 0.14, respectively. According to the capital asset pricing model (CAPM), the expected rate of return on security X with a beta of 1.25 is equal to: a. 0.004 b. 0.165 C. 0.121 d. 0.132