{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

chap07 - The difference between the expected return on the...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Sheet1 Page 1 The difference between the expected return on the market and the risk-free rate is called: a. beta. b. the market rate. c. the market risk premium. d. none of the above. status: not answered () correct: c your answer: -------------------------------------------------------------------------------- 2 The expected return on Stock X is 15.75% while the risk-free rate of return is 7%. If the expected return on the market is 12% a. 1.90 b. 1.75 c. 1.60 d. 1.45 status: not answered () correct: b your answer: -------------------------------------------------------------------------------- 3 Use the following information concerning Airline X's stock returns to solve the next few problems. Outcome Probability Return Boom .2 .25 Normal .5 .15 Recession .3 .05 What is the expected return for Airline X? a. .15 b. .14 c. .13 d. .12 status: not answered () correct: b
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Sheet1 Page 2 your answer: -------------------------------------------------------------------------------- 4 Use the following information concerning Airline X's stock returns to solve the next few problems. Outcome Probability Return Boom .2 .25 Normal .5 .15 Recession .3 .05 What is the standard deviation of the return for Airline X? a. .0000 b. .0700 c. .0049 d. none of the above status: not answered () correct: b your answer: -------------------------------------------------------------------------------- 5 You have $20,000 to invest and you decide to invest $30,000 in a stock with an expected return of 16% and short $10,000 i a. 18% b. 16% c. 14% d. 12% status: not answered () correct: a your answer: -------------------------------------------------------------------------------- 6 You have $50,000 to invest and you decide to invest $30,000 in a stock with a beta of 1.5 and $20,000 in a stock with a bet a. 1.50 b. 1.40 c. 1.30 d. 1.20
Image of page 2
Sheet1 Page 3 status: not answered () correct: c your answer: -------------------------------------------------------------------------------- 7 You have $40,000 to invest and you decide to invest $30,000 in a stock with an expected return of 12% and $10,000 in a st a. 15% b. 14% c. 13% d. 12% status: not answered () correct: c your answer: -------------------------------------------------------------------------------- 8 The Capital Asset Pricing Model can be used to determine the expected return on: a. only stocks.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern