Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

1. Let the multi-factor APT with two factors.  Risk premiums on factor 1 and factor 2 portfolios are respectively 5% and 3%.  Stock A has beta of 1.4 on factor 1, and beta of 0.5 on factor 2.  Expected return on stock A is 14%.  If no arbitrage opportunities exist, risk-free rate of return is __________.

A) 5.0%

B) 5.5%

C) 6.0%

D) 6.5%

2. Security A has expected rate of return of 12% and beta of 1.10.  Market expected rate of return is 8% and risk-free rate is 5%.  Alpha of stock is __________.

A) -1.7%

B) 3.7%

C) 5.5%

D) 8.7%

3. Risk-free rate is 4%.  Expected market rate of return is 11%.  If you expect stock X with a beta of .8 to present a rate of return of 12 percent, then you must __________.

A) Buy stock X because it is overpriced

B) Buy stock X because it is underpriced

C) Sell short stock X because it is overpriced

D) Sell short stock X because it is underpriced

4. Asset A has the expected return of 15% and Sharpe ratio of .4.  Asset B has expected return of 20% and Sharpe ratio of .3. Risk-averse investor would favour a portfolio using risk-free asset and _______.

A) Asset A

B) Asset B

C) No risky asset

D) Can't tell from the data given

5. Expected return on market portfolio is 15%.  Risk-free rate is 8%.  Expected return on SDA Corp. common stock is 16%.  Beta of SDA Corp. common stock is 1.25.  Within context of capital asset pricing model, __________.

A) SDA Corp. stock is underpriced

B) SDA Corp. stock is fairly priced

C) SDA Corp. stock's alpha is -0.75%

D) SDA Corp. stock alpha is 0.75%

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M917084

Have any Question? 


Related Questions in Accounting Basics

Accounting discussion questionaccounts receivable bad debt

Accounting Discussion Question "Accounts Receivable Bad Debt Expense (Direct Write Off Method Vs Allowance Method)": • Discuss the primary advantages and disadvantages of applying the direct write-off over the allowance ...

Dine corp international publishes ratings and reviews of

Dine corp international publishes ratings and reviews of the world finest restaurants.following are the facts you need to prepare dine corp's march bank reconcilation. Balance per company records at end of month  $      ...

Problem 1conceptual leasing bought a grader for 600000 and

Problem 1 "Conceptual Leasing bought a grader for $600,000 and the leased it back to Parole Inc. on January 1, 2011. The description of the lease follows: • Quarterly Rent Payments=$34,000 • Leaser term= 4 years (16 quar ...

Accounting theory and contemporary issues individual case

Accounting Theory and Contemporary Issues Individual case study Assignment- Assessment Description - Learning Outcome:  Research and argue a position in regard to a contemporary issue in the accounting profession. Evalua ...

Assignment the apportionmentyou are a census officer in a

Assignment: The Apportionment You are a census officer in a newly democratic nation and you have been charged with using the census data from the table below to determine how 100 congressional seats should be divided amo ...

Why does it matter whether social security is considered a

Why does it matter whether Social Security is considered a pension plan or an entitlement program? How does the FASAB direct that Social Security be reported? What unique issues does the federal government face in calcul ...

1 a title page replace this page with your title page

1. A title page (replace this page with your title page), proper grammar and a reference list. 2. A 2-3 page summary of the article - here's a suggested method for writing the summary: a. Read the article and make sure y ...

Accounting cycle project transaction practice set - bampg

Accounting Cycle Project Transaction Practice Set - B&G Music You have been hired as an accountant for B&G Co., a corporation performing diverse consulting services in Detroit, Michigan. B&G Co. prepares financial statem ...

Presentation 2- separate presentations but use same

Presentation (2- Separate Presentations but use same Publicly Traded Company) ** Please use references as needed ** Create a 10- to 12-slide presentation. Choose a publicly traded company. Using the most recent SEC 10-k ...

Internal control procedures are required for all

Internal control procedures are required for all transaction cycles within an accounting cycle. This week you are addressing the control procedures that would be the most effective in the general ledger and reporting sys ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen