Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

problem: Stock A has a 10 percent expected return, a beta coefficient of 0.9, & a 35% standard deviation of expected returns. Stock B has a 12.5 percent expected return, a beta coefficient of 1.2, & a 25% standard deviation. The risk-free rate is 6%, & the market risk premium is 5 percent.

[A] Compute each stock's coefficient of variation.

[B] Find which stock is riskier for a diversified investor?

[C] Compute each stock's required rate return.

[D] On the basis of the two stock's expected & required returns, determine which stock would be more attractive to a diversified investor?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M920220

Have any Question? 


Related Questions in Basic Finance

Suppose you borrow 300000 at 7 for 30 years with 0 points

Suppose you borrow $300,000 at 7% for 30 years with 0 points. Suppose also that the mortgage note includes a prepayment penalty of 1% of the mortgage balance if the mortgage is prepaid within 10 years. What is the effect ...

In the face of global oil price shocks what could monetary

In the face of global oil price shocks, what could monetary policymakers do to minimize the resulting recessionary gaps? What would be the tradeoff of such a policy? Illustrate your answer using the aggregate demand-aggr ...

Write the word or phrase that best completes each statement

Write the word or phrase that best completes each statement or answers the question. Solve the problem. Round dollar amounts to the nearest dollar. Use the straight-line method to complete the depreciation table for a co ...

Explain how open market purchases and sales influence

Explain how open market purchases and sales influence interest rates. To increase the money supply, should the Fed use an open market purchase or sale?

In june 2010 john pays 9800 for a one- year t-bill that can

In June 2010, John pays $9,800 for a one- year T-bill that can be redeemed for $10,000. What is the amount of interest earned? What is the yield?

Explain the following statementeven though outright

Explain the following statement: Even though outright purchases account for less than 10 percent of Fed transactions, the Fed's portfolio of securities consists mainly of securities bought outright.

Pure expectations theory explain how a yield curve would

Pure Expectations Theory : Explain how a yield curve would shift in response to a sudden expectation of rising interest rates, according to the pure expectations theory.

Advanced financial advice instructions to candidates-1nbsp

Advanced Financial Advice: Instructions to candidates- 1.  You should familiarise yourself with this fact find prior to sitting the March 2016 examination. The March 2016 examination paper will be based upon this fact fi ...

Assignment-investmentsa general bond and investor

Assignment- INVESTMENTS A. GENERAL BOND AND INVESTOR INFORMATION 1. Briefly discuss the general characteristics of the bond touching on: a. A brief description of the company that issued the bond. b. A brief description ...

In 1989 the economist paul samuelson rated warren buffett

In 1989, the economist Paul Samuelson rated Warren Buffett the greatest stock picker in the country. Yet Samuelson warned against buying Berkshire Hathaway stock. He wrote that "knowledge of Buffett's skills may be alrea ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate