Stock Y has a beta of 1 and an expected return of 13.5 percent. Stock Z has a beta of .6 and an expected return of 9 percent. If the risk-free rate is 5.8 percent and the market risk premium is 6.8 percent, the reward-to-risk 5.33 percent, respectively. Since ratios for Stocks Y and Z are 7.70 and the SML reward-to-risk is 6.80 percent, Stock Y is and Stock Z is (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
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- Stock Y has a beta of 1.8 and an expected return of 18.2 percent. Stock Z has a beta of 8 and an expected return of 9.6 percent. If the risk-free rate is 5.2 percent and the market risk premium is 6.7 percent, the reward-to-risk ratios for Stocks Y and Z are percent, respectively. Since and the SML reward-to-risk is percent, Stock Y is and Stock Z is (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)Stock Y has a beta of 1.4 and an expected return of 15.1 percent. Stock Z has a beta of .7 and an expected return of 8.6 percent. If the risk-free rate is 5 percent and the market risk premium is 6.5 percent, the reward-to-risk ratios for Stocks Y and Z are the SML reward-to-risk is percent, Stock Y is and percent, respectively. Since and Stock Z is (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)1. Stock Y has a beta of 1.2 and an expected return of 11.1 percent. Stock Z has a beta of .8 and an expected return of 7.85 percent. If the risk-free rate is 2.4 percent and the market risk premium is 7.2 percent, the reward-to-risk ratios for stocks Y and Z are ____ and ____ percent, respectively. Since the SML reward-to-risk is ____ percent, Stock Y is ____(undervalued/ overvalued) and Stock Z is ____(undervalued/ overvalued).
- Stock Y has a beta of 1.2 and an expected return of 14.5 percent. Stock Z has a beta of 0.7 and an expected return of 9.3 percent. if the risk free rate is 5.6 percent and the market risk premium is 6.6 percent, the reward-to-risk ratiosStock X has a beta of 1.15 and an expected return of 11.1 percent. Stock Y has a beta of 1.2 and an expected return of 11.5 percent. What is the risk - free rate of return assuming that both stock X and stock Y are correctly priced?Stock Y has a beta of 0.9 and an expected return of 11.4 percent. Stock Z has a beta of 1.5 and an expected return of 8.06 percent. If the risk-free rate is 2.5 percent and the market risk premium is 7.2 percent, are these stocks correctly priced?
- We have the following information on Stocks A and B. The risk-free rate is 5%, and the market risk premium is 7.5%. Assume that the market portfolio is correctly priced. Based on the reward-to-risk ratio, are Stocks A and B overpriced, underpriced, or correctly priced? Stock A Stock B Expected return 1196 16.25% Beta 0.8 1.5Stock A has a beta of 0.2, and investors expect it to return 3%. Stock B has a beta of 1.8, and investors expect it to return 11%. Use the CAPM to calculate the market risk premium and the expected rate of return on the market. (Enter your answers as a whole percent.) Market risk Premium ______% Expected Market Rate of Return _____%Stock Y has a beta of 1.40 and an expected return of 19%. Stock Z has a beta of 0.65 and an expected return of 10.5%. The market risk premium is 8.8%. The risk-free rate is 6%, are these stocks correctly priced? Show your argument for each stock. Hint: first find the expected return using CAPM for each stock.
- Stock Y has a beta of 1.50 and an expected return of 17 percent. Stock Z has a beta of 0.80 and an expected return of 10.50 percent. If the risk-free rate is 5.50 percent and the market risk premium is 7.50 percent. Evaluate any excess return that you can earn on two stocks with suggestion.Suppose the market risk premium is 9 % and also that the standard deviation of returns on the market portfolio is 0.26 . Further assume that the correlation between the returns on ABX (Barrick Gold) stock and returns on the market portfolio is 0.62 , while the standard deviation of returns on ABX stock is 0.36 . Finally assume that the risk-free rate is 2 %. Under the CAPM, what is the expected return on ABX stock? (write this number as a decimal and not as a percentage, e.g. 0.11 not 11%. Round your answer to three decimal places. For example 1.23450 or 1.23463 will be rounded to 1.235 while 1.23448 will be rounded to 1.234)(d) Suppose the risk-free rate is 4%, the market risk premium is 15% and the betas for stocks X and Y are 1.2 and 0.2 respectively. Using the CAPM model, estimate the required rates ofreturn of Stock X and Stock Y. (e) Given the results above, are Stocks X and Y overpriced or underpriced? Explain.