{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter 8b

# Chapter 8b - Chapter 8b 1 What is the expected rate of...

This preview shows pages 1–2. Sign up to view the full content.

Chapter 8b 1. What is the expected rate of inflation if the real rate is 4.5% and the expected nominal rate is 6%? 2. What is the expected nominal rate if the expected real rate and rate of inflation are 2.7 and 2.5 percent respectively? 3. Borha Investments is considering whether or not to invest in a certain security. Calculate the security’s expected return and standard deviation. Probability Retur n 0.17 -0.015 0.23 0 0.4 0.05 0.2 0.14 4. You are considering investing in shares of Blackened Berries Inc. Calculate their expected return and standard deviation. Probability Retur n 0.23 -1.5% 0.27 0.0% 0.3 5.0% 0.2 14.0% 5. Compute Livin’ the Dream Inc’s required rate of return given a beta of .9, risk free rate of 3.25%, and the expected market return of 9%. 6. Compute Fine Co’s required rate of return given a beta of 1.5, risk free rate of 5%, and a market premium of 4%. 7. You are considering investing in 4 different securities. Assume that the expected market return is 7% and the treasury bill rate is 2.5%. Calculate the required returns for each investment assuming the following betas.

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 5

Chapter 8b - Chapter 8b 1 What is the expected rate of...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online