finance questions-

Consider the following information:

		Rate of Return If State Occurs
State of	Probability of
Economy	State of Economy	Stock A	Stock B
Recession	.35	.07	-.17
Normal	.40	.09	.16
Boom	.25	.13	.36

a.	Calculate the expected return for the two stocks.(Round your answers to 2 decimal places. Omit the “%” sign in your response.)

Expected Return for A	%
Expected Return for B	%

b.	Calculate the standard deviation for the two stocks. (Round your answers to 2 decimal places. Omit the “%” sign in your response.)

Standard deviation for A	%
Standard deviation for B	%

Need help figuring out standard deviation

7.

value:
3.00 points

Problem 11-9

Consider the following information:

		Rate of Return If State Occurs
State of	Probability of
Economy	State of Economy	Stock A	Stock B	Stock C
Boom	.25	.18	.32	.41
Good	.20	.12	.15	.15
Poor	.40	.05	-.08	-.06
Bust	.15	-.01	-.16	-.09

a.	Your portfolio is invested 25 percent each in A and C, and 50 percent in B. What is the expected return of the portfolio?(Round your answer to 2 decimal places. Omit the “%” sign in your response.)

Expected return

%

b-1.	What is the variance of this portfolio?(Round your answer to 5 decimal places.)

Variance of this portfolio

b-2.	The standard deviation?(Round your answer to 2 decimal places. Omit the “%” sign in your response.)

Standard deviation

%

**Need help figuring out standard deviation.

8.

value:
4.00 points

Problem 11-10

Fill in the missing information in the following table. Assume that Portfolio AB is 60 percent invested in Stock A.(Round your answer to 2 decimal places. Negative amounts should be indicated by a minus sign. Omit the “%” sign in your response.)

Annual Returns on Stocks A and B
Year	Stock A	Stock B	Portfolio AB
2006	14	%	24	%		%
2007	35.8	%	-36.2	%		%
2008	-18.6	%	46.2	%		%
2009	25.4	%	16.6	%		%
2010	14.2	%	25.8	%		%
Avg return		%		%		%
Std deviation		%		%		%

Only was able to figure out average return.

11.

value:
1.00 points

Problem 12-2

A stock has an expected return of 11.2 percent, its beta is .50, and the risk-free rate is 4 percent. What must the expected return on the market be?(Round your answer to 2 decimal places. Omit the “%” sign in your response.)

Expected return

%

Don’t know how to figure out expected return. Please show all steps. I need to know how to figure out for the test.

Problem 12-3

A stock has an expected return of 15.9 percent, a beta of 1.70, and the expected return on the market is 11.2 percent. What must the risk-free rate be?(Round your answer to 2 decimal places. Omit the “%” sign in your response.)

Risk-free rate

%

Problem 12-10

A stock has a beta of 1.2 and an expected return of 8 percent. A risk-free asset currently earns 3 percent.

a.	What is the expected return on a portfolio that is equally invested in the two assets?(Round your answer to 2 decimal places. Omit the “%” sign in your response.)

Expected return

%

b.	If a portfolio of the two assets has a beta of 1.0, what are the portfolio weights?(Round your answers to 2 decimal places. Omit the “%” sign in your response.)

	Weight
xS	%
xrf	%

c.	If a portfolio of the two assets has an expected return of 6 percent, what is its beta?(Round your answer to 2 decimal places.)

Beta

d.	If a portfolio of the two assets has a beta of 2.40, what are the portfolio weights?(Negative amounts should be indicated by a minus sign. Omit the “%” sign in your response.)

	Weight
xS	%
xrf	%

20.

value:
1.00 points

Problem 12-13

Stock Y has a beta of 1.5 and an expected return of 15.5 percent. Stock Z has a beta of 0.4 and an expected return of 7 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?(Round your answer to 2 decimal places. Omit the “%” sign in your response.)

Risk-free rate

%

21.

value:
2.00 points

Problem 12-15

Suppose you observe the following situation:

Security	Beta	Expected Return
Peat Co.	1.20	14.6
Re-Peat Co.	.60	10.3

Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-free rate?(Round your answer to 2 decimal places. Omit the “%” sign in your response.)

Expected return	%
Risk-free rate	%

 

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