A firm has a Beta of 1.6. The market return is measured as 8.5% and the risk free rate is 1.75% Is this firm's stock more or less volatile/risky than the overall stock market? Group of answer choices This firm is MORE risky than the average firm. This firm is LESS risky than the average firm. This firm has SIMILAR risk to the average firm. There is not enough information to tell.
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- What is the beta of a firm whose equity has an expected return of 21.3 percent when the risk - free rate of return is 7.0 percent and the expected return on the market is 18.0 percent? Select one: а. 1.30 b. None of these с. 1.57 D. 0.791. If a company has a Beta = 1.7, this stock is riskier than the S&P 500 index. That means its price fluctuates more than the market average. We can also say that the company’s stock price is more volatile than average. What’s good about a Beta > 1 and what’s bad about it? 2. T or F? Higher risk investments give the investor a higher return. If this is true, why don’t we all invest in the riskiest investments we can find? What’s the difference between fundamental analysis and technical analysis? Don’t simply define them both. Figure out what’s different. 3. If the value > price, then BUY according to value investors If the value < price, the DON’T BUY or maybe sell or hold according to value investors Would “momentum” investors say Buy or Don’t Buy? What would “income investors” want to know in order to make a BUY decision?Stock A is fairly priced by the market. Given that the risk free rate is 3.5%, the beta of stock A is 1.2, the beta of stock B is 0.8, the expected return on A is 6.5% and on B is 5.5% which of the following is correct given that betas of stocks A and B are correct? a. Stock B is also fairly priced b. The expected return on stock B is too high c. The expected return on stock A is too high d. The price of stock B is too high e. The price of stock A is too high. 9) Which of the following would likely have the greatest amount of systematic risk? a. A portfolio of the ordinary shares of 100 randomly selected companies b. The market portfolio c. A portfolio half invested in the market portfolio and half invested in treasury bills d. A portfolio half invested in the market portfolio and half invested in stocks with betas greater than 1.5 e. A portfolio made up entirely of treasury bills
- You want to estimate the cost of equity of firm A using CAPM. Firm A has a beta of 1.3. Assume that the return on the market portfolio is 8.52%, and the risk-free rate is 3%. What is the cost of equity of firm A? Group of answer choices There is not enough information to answer this question. 10.17% 11.74% 14.21% 12.11%Based on the CAPM, Jensen's Alpha of a firm a) equals zero if the firm's stock returns have underperformed as compared to the market after adjusting for its beta risk. b) is positive if the firm's stock returns have overperformed as compared to the market after adjusting for its beta risk. c) is negative if the firm's stock returns have overperformed as compared to the market after adjusting for its beta risk. d) equals one if the firm's stock returns have underperformed as compared to the market after adjusting for its beta risk.Stock A has a beta = 0.8, while Stock B has a beta = 1.6. Which of the following statements is CORRECT? a. If the marginal investor becomes more risk averse, the required return on Stock B will increase by more than the required return on Stock A. b. An equally weighted portfolio of Stocks A and B will have a beta lower than 1.2. c. If the marginal investor becomes more risk averse, the required return on Stock A will increase by more than the required return on Stock B. d. If the risk-free rate increases but the market risk premium remains constant, the required return on Stock A will increase by more than that on Stock B. e. Stock B's required return is double that of Stock A's.
- (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Probability 0.35 0.30 0.35 Return 13% 14% 18% Common Stock B Return - 6% 7% 16% 20% Probability 0.15 0.35 0.35 0.15 (Click on the icon in order to copy its contents into a spreadsheet.)Mulherin's stock has a beta of 1.34, its required return is 8.33%, and the risk-free rate is 2.30%. What is the required rate of return on the market? (Hint: First find the market risk premium.) Do not round your intermediate calculations. Please explain process and show calculations.You have been provided the following information as part of a consultation query:The risk free rate is 3.2%The market risk premium (rM - rRF) is 5.3%Stock A - has a beta of 1.2 betaStock B - has a beta of 0.85 beta (a). What is the required rate of return on each stock? (b). Assume that investors become less willing to take on risk (ie., they become more riskaverse), so the market risk premium rises 6%. Assume that the risk-free rate remains constant. What effect will this have on the required rates of return on the two stocks?
- Kaskin, Inc., stock has a beta of 1.2 and Quinn, Inc., stock has a beta of .6. Which of the following statements is most accurate? The expected rate of return will be higher for the stock of Kaskin, Inc., than that of Quinn, Inc. The stock of Kaskin, Inc., has more total risk than the stock of Quinn, Inc. The stock of Quinn, Inc., has more systemic risk than that of Kaskin, Inc.What is the beta of a firm whose equity has an expected return of 21.3 percent when the risk-free rate of return is 7.0 percent and the expected return on the market is 18.0 percent? Select one: a. None of these O b. 0.79 O c. 1.30 O d. 1.57Give typing answer with explanation and conclusion The return on the Tarheel Corporation stock is expected to be 14 percent with a standard deviation of 9 percent. The beta of Tarheel is 0.9. The risk-free rate is 6 percent, and the expected return on the market portfolio is 16 percent. What is the probability that an investor in Tarheel will earn a rate of return less than the required rate of return? Assume that returns are normally distributed. Use Table V to answer the question. Round z value in intermediate calculation to two decimal places. Round your answer to the nearest whole number.