Expected return of a portfolio using beta. The beta of four stocks-P, Q, R, and S-are 0.60, 0.85, 1.20, and 1.35, respectively and the beta of portfolio 1 is 1.00, the beta of portfolio 2 is 0.90, and the beta of portfolio 3 is 1.12. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 3.0% (risk-free rate) and a market premium of 11.0% (slope of the line)? What is the expected return of stock P? % (Round to two decimal places.)
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- Using the data in the following table, LOADING... , consider a portfolio that maintains a 75% weight on stock A and a 25% weight on stock B. a. What is the return each year of this portfolio? b. Based on your results from part (a), compute the average return and volatility of the portfolio. c. Show that (i) the average return of the portfolio is equal to the (weighted) average of the average returns of the two stocks, and (ii) the volatility of the portfolio equals the same result as from the calculation in Eq. 11.9. d. Explain why the portfolio has a lower volatility than the average volatility of the two stocks. Question content area bottom Part 1 a. What is the return each year of this portfolio? Enter the return of this portfolio for each year in the table below: (Round to two decimal places.) Year 2010 2011 2012 2013 2014 2015 Portfolio enter your response here% enter your response here% enter your response…The data on the expected return of 2 stocks (M and C) along with the economic conditions and their probabilities is attached below Questions : Calculate the expected return for asset M and asset C. Calculate the standard deviation for asset M and asset C. c) If asset M is a market portfolio, while the beta (β) for asset C is 1.25 and the risk-free asset is 6%. What is the required rate of return for asset C according to the CAPM method ?. .In reference to the portfolio information presented below, answer the following questions. Portfolio Weighting in Stock K Weighting in Stock L Weighting in Stock M Weighting in Stock N Portfolio 1 25% 25% 25% 25% Portfolio 2 30% 40% 20% 10% Portfolio 3 10% 20% 40% 30% The betas of the above four stocks, K, L, M, and N are 0.65, 0.9, 1.25, and 1.55, respectively. Calculate the beta for each of the portfolio in the above table given the weights in each asset as presented in the table. Show all work and formula(s) clearly. Specify the type of risk (i.e. systematic or unsystematic) beta is generally used to measure.
- Using the return data on portfolios A and B provided in the accompanying spreadsheet, compute the return volatility for portfolio A. Round off your answer to three digits after the decimal point. State your answer as a percentage point, such as 1.234.Consider an investment portfolio that consists of three different stocks, with the amount invested in each asset shownbelow. Assume the risk-free rate is 2.5% and the market risk premium is 6%. Use this information to answer thefollowing questions.Stock Weights BetasChesapeake Energy 25% 0.8Sodastream 50% 1.3Pentair 25% 1.0a) Compute the expected return for each stock using the CAPM and assuming that the stocks are all fairly priced.b) Compute the portfolio beta and the expected return on the portfolio.c) Now assume that the portfolio only includes 50% invested in Pentair and 50% invested in Sodastream (i.e., a twoassetportfolio). The yearly-return standard deviation of Pentair is 48% and the yearly-return standard deviation ofSodastream is 60%. The correlation coefficent between Pentair’s returns and Sodastream’s returns is 0.3 What is theexpected yearly-return standard deviation for this portfolio?Consider a $30,000 portfolio consisting of three stocks. Their values and expected returns are as follows (refer to image): What is the weighted-average expected return on the portfolio?
- Using the data in the following table, calculate the volatility (standard deviation) of a portfolio that is 75% invested in stock A and 25% in stock B.Expected return of a portfolio using beta. The beta of four stocks—P, Q, R, and S—are 0.49, 0.81, 1.19, and 1.53, respectively and the beta of portfolio 1 is 1.01, the beta of portfolio 2 is 0.86, and the beta of portfolio 3 is 1.15. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 4.5% (risk-free rate) and a market premium of 12.0% (slope of the line)? What is the expected return of stock P? (Round to two decimal places.) What is the expected return of stock Q? (Round to two decimal places.) What is the expected return of stock R? (Round to two decimal places.) What is the expected return of stock S? (Round to two decimal places.) What is the expected return of portfolio 1? (Round to two decimal places.) What is the expected return of portfolio 2? (Round to two decimal places.) What is the expected return of portfolio 3?…Expected return of a portfolio using beta. The beta of four stocks—G, H, I, and J—are 0.44, 0.75, 1.21, and 1.55, respectively and the beta of portfolio 1 is 0.99, the beta of portfolio 2 is 0.83, and the beta of portfolio 3 is 1.14. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 3.5% (risk-free rate) and a market premium of 10.0% (slope of the line) What is the expected return of portfolio 1? (Round to two decimal places.) What is the expected return of portfolio 2? (Round to two decimal places.) What is the expected return of portfolio 3? (Round to two decimal places.)
- Expected return of a portfolio using beta. The beta of four stocks—G, H, I, and J—are 0.44, 0.75, 1.21, and 1.55, respectively and the beta of portfolio 1 is 0.99, the beta of portfolio 2 is 0.83, and the beta of portfolio 3 is 1.14. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 3.5% (risk-free rate) and a market premium of 10.0% (slope of the line)? What is the expected return of stock G? (Round to two decimal places.) What is the expected return of stock H? (Round to two decimal places.) What is the expected return of stock I? (Round to two decimal places.) What is the expected return of stock J? (Round to two decimal places.) What is the expected return of portfolio 1? (Round to two decimal places.) What is the expected return of portfolio 2? (Round to two decimal places.) What is the expected return of portfolio 3?…A small market consists of three stocks, A, B, and C. and their financial data and projection are presented below. Assume CAPM holds. Find: a) the expected return and standard deviation on this portfolio. b) the expected return on the market using portfolio beta if Rf=5%.The index model has been estimated for stocks A and B with the following results: RA 0.01 +0.5RM + A RB = 0.02 +1.3RM + eB standard deviation of the market is 0.25, standard deviation of eA is 0.2 and standard deviation of eB is 0.10 What is the covariance betwween the returns on stocks A and B?.