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Refer to the following information Amount Invested 8000 shares of Stock A S16000 15,000 shares of Stock B 25000 shares of Stock C $48000 $96000 Beta Beta

 Refer to the following information. Amount Invested 8,000 shares of Stock A S16,000 15,000 shares of Stock B 25,000 shares of Stock C $48,000 $96,000 Beta Beta = 1.3 Beta = 1.8 Beta = 2.2 23. Firm A's Beta = 2, required return = 23%. Firm B's beta 1 and required return = 14%. The standard deviation of retums for stock A = 10% + standard deviation for stock B. Market return =? Based on CAPM (hint: write down the CAPM for both stock A and B and solve for market return) A) 9%. B) 12%. C) 14%. D) 10%. 10.8%. The risk-free rate = 3.8%. 24. A stock's expected return - 16.3%. The market retum The beta =? A).94 B) 1.28 0) 1.31 D) 1.62 E) 1.79 25. Beta is which of the following: A) standard deviation. B) total risk. C) Beta is the relationship which is between an investment's return, and the market retum. D) unsystematic risk. 26. A bond: pay $75 each year in interest, and a $1,000 payment at maturity. The $1.000 is called? A) coupon B) face value C) discount D) yield 27. Beta for stock AAA = 0, so, A) stock AAA's return = the return of the market portfolio. B) stock AAA's required return = the risk-free rate C) stock AAA has a promised return, regardless of the market condition. D) stock AAA's return > return of the market portfolio

Feb 08 2020 View more View Less

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