Solved: What are the risk premiums for each factor in the model, Finance Basics

+44 141 628 6080
[email protected]

What are the risk premiums for each factor in the model

Problem: Suppose stock returns can be explained by a two-factor model information for two diversified portfolios:

B1 B2 Expected Return
Portfolio A .85 1.15 16%
Portfolio B 1.45 -.25 12%

If the risk free rate is 4%, what are the risk premiums for each factor in the model?

Solution Preview :

Prepared by a verified Expert

Finance Basics: What are the risk premiums for each factor in the model

Reference No:- TGS02074420

Now Priced at $20 (50% Discount)

Recommended (98%)

Rated (4.3/5)

Have a Question? (oR Write a Review)

Write atleast 100 words!!

Recent Questions Asked Finance Basics

Q : What senses are involved in the memory

Choose a historic flashbulb memory that has significance to you and describe it in detail. What senses are involved in this memory?

Q : Accounting for long-term investments

Question 1. Accounting for long-term investments in equity securities with controlling influence uses the:

Q : Jobs involving a financial function

As an example take a look at the company or organization you work in and identify those people whose jobs involve a financial function.

Q : Describe alternative ways that social worker might evaluated

Describe alternative ways, if any, that the social worker might have evaluated the program. What are the weaknesses or threat to the validity of the evaluation.

Q : What are the risk premiums for each factor in the model

If the risk free rate is 4%, what are the risk premiums for each factor in the model?

Q : Determine the future direction of us interest rates

Determine how the demand for and the supply of loanable funds would be affected, and determine the future direction of U.S. interest rates.

Q : How much pay to purchase each share of stock

If you want to earn 12% on an investment in the common stock of Michelak's, how much should you pay to purchase each share of stock?

Q : Explain the successful termination of client relationship

Explain the successful termination of the client relationship. Discuss strategies for helping the client to maintain change post-termination.

Q : Determine the firms optimal capital structure

a. Determine the firm's optimal capital structure. b. Construct a simple pro forma balance sheet that shows the firm's optimal combination of debt and equity.

1923242

Questions
Asked

3,689

Active Tutors

1416037

Questions
Answered

Start Excelling in your courses, Ask a tutor for help and get answers for your problems !!

ask Question

Asked Questions

Male with major depressive disorder is started on bupropion

Scenario: A 45-year-old male with major depressive disorder is started on bupropion. He reports dry mouth.

Female with major depressive disorder consider pregnancy

A 33-year-old female with major depressive disorder is considering pregnancy. She is currently on paroxetine.

Discuss about male with recurrent mdd is in remission

A 60-year-old male with recurrent MDD is in remission. According to APA guidelines, how long should maintenance treatment continue

Patient on an antidepressant reports sexual dysfunction

Scenario: A patient on an antidepressant reports sexual dysfunction.

What medication names requires correction

Question: Which statement about medication names requires correction?

Problem -female with major depressive disorder and anxiety

A 35-year-old female with major depressive disorder and anxiety is started on venlafaxine 75mg. She reports increased anxiety after one week

Patient with depression is prescribed a maoi

A patient with depression is prescribed a monoamine oxidase inhibitor (MAOI). • Question: What is the primary function of MAOIs?