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What would have been the realized rate of return on the portfolio in each year? What would have been the average return on the portfolio during this period?
Assume that the risk-free rate is 5 percent and the market risk premium is 6 percent. What is the expected return for the overall stock market?
Assume that the risk-free rate is 6 percent and the expected return on the market is 13 percent.
Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks.
If the market required rate of return is 14 percent and the risk-free rate is 6 percent, what is the fund’s required rate of return?
You have a $2 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta equal to 1.1.
Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average stock is 13 percent, and the risk-free rate of return.
If investors’ aversion to risk increased, would the risk premium on a high-beta stock increase more or less than that on a low-beta stock? Explain.
Security A has an expected return of 7 percent, a standard deviation of returns of 35 percent, a correlation coefficient with the market of 0.3.
Can you think of any asset that would be completely riskless? Could someone develop such an asset? Explain.
The real risk-free rate is 3 percent, and inflation is expected to be 3 percent for the next 2 years. A 2-year Treasury security yields 6.2 percent.
Due to its asset size, TIAA–CREF must acquire large positions that it plans to actively vote. However, who owns TIAA–CREF?
If the overall stock market is extremely volatile, and if many analysts foresee the possibility of a stock market crash.
Assume that you are serving on the board of directors of a medium-sized corporation, and you are responsible for establishing the compensation.
If you were the president of a large, publicly owned corporation, would you make decisions to maximize stockholders’ welfare.
John considers a cost difference of S100 or more to be of strong importance, and a difference of S50 to be of moderate importance.
John considers the difference between fair quality and good quality to be of strong importance.
Write down a one-page description of the decision. Include where you were, what choices vou had, what you chose to do, and why.
John considers the difference between no familiarity with the computing equipment and some familiarity to be of strong importance.
Rockies Adventure Wear, Inc., has been selling athletic and outdoor clothing through catalogue sales.
What are the characteristics of projects where simulation makes sense? Provide several examples of this type of project.
John considers the difference between good reliability and fair reliability to be of moderate importance.
The manager is not sure about the likelihood of the four savings scenarios, so she assumes that they are equally likely.
Regional Express is a small courier service. By introducing a new computerized tracking device, they anticipate some increase in revenue.
Katrina is thinking about buying an automobile. She figures her monthly payments will be € 9 0 for insurance, €3 0 for gas, and €2 0 for general maintenance.