1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
erma4kov [3.2K]
3 years ago
6

Consider the one-factor APT. The standard deviation of returns on a well-diversified portfolio is 18%. The standard deviation on

the factor portfolio is 16%. The beta of the well-diversified portfolio is approximately:_________
Consider the single-factor APT. Stocks A and B have expected returns of 15% and 18%, respectively. The risk-free rate of return is 6%. Stock B has a beta of 1.0. If arbitrage opportunities are ruled out, stock A has a beta of:__________
Business
1 answer:
Luden [163]3 years ago
5 0

Answer and Explanation:

The computation is shown below:

1. For Beta^2

= Standard Deviation of Well Diversified Portfolio^2 ÷ Standard Deviation of factor Portfolio^2

= (18%^2 ÷ 16%^2)^0.5

= 18 ÷ 16

= 1.125 or 1.13

And,

2. Expected Return = Risk free rate + Beta ×Factor

18% = 6% + 1 × F

F = 12%

The Beta of A is

= (15% -  6%) ÷ 12%

= 0.75

We simply applied the above formula so that the correct value could come

And, the same is to be considered

You might be interested in
In the financial industry, "securitization" refers to
iren [92.7K]

<span>In the financial industry, "securitization" refers to bundling debt, such as loans, bonds and mortgages into securities. In finance, a security is a tradable asset. They are debt securities such as bonds and then there are equity securities such as stocks. Bundling debt keeps everything organized and streamlined for people to know what they need to pay down. </span>

3 0
3 years ago
Traditionally, life insurance companies, pension funds, and brokerage firms are known as ________.
Elodia [21]
Nonbanks.......................................................
3 0
3 years ago
For businesses that gross in excess of $10 million per year, pro forma amounts are usually ________. rounded to the nearest ten
KatRina [158]

Answer:

rounded to the nearest ten thousand dollars

Explanation:

The term pro forma financial statements refers to a type of financial statement which estimates future financial results. It doesn't follow the GAAP, instead it is designed to focus on specific figures about a company's expected earnings. Although pro forma financials are only expected financial statements, it is still illegal to mislead investors using them.

5 0
3 years ago
A best-seller novel sells for $28 in hardback edition and $12 in a paperback edition. a book store's sales of both editions tota
Mekhanik [1.2K]
The number of each type of book is what is unknown, so we can represent those quantities with variables. Let x = the number of hardbacks and y = the number of paperbacks. Then we know that: x + y = 65 (the total number of books sold) We also know the total cost of both editions, which is $1356. It can be written algebraically as: 28x + 12y = 1356 We now have a system of two equations, which can be solved by substitution. It would be easier to solve the first equation for either x or y and substitute that into the second equation. 
6 0
3 years ago
Which of the following circumstances usually comes before a period of economic contraction?
erik [133]
C
A low GDP for two or more consecutive quarters is usually followed by economic contraction. 
8 0
3 years ago
Other questions:
  • Primary data can usually be obtained more quickly and at a lower cost than secondary data.
    5·1 answer
  • If a software package is purchased, consider a _____, which offers additional support and assistance from the vendor.​
    14·1 answer
  • You want to search for articles that discuss the role of nature in the poetry of Emily Dickinson. You're specifically interested
    10·1 answer
  • I have $65,000 that I need to invest but I want to make more than the bank is offering. Where can I get a high return on a short
    5·1 answer
  • What is the future value of $450 at an interest rate of 15 percent one year from today?
    12·1 answer
  • A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh
    15·1 answer
  • For the majority of companies, the most common increase in the cost of production results from rising ____.
    5·2 answers
  • Shiro enrolled in Composition 101, a three-credit course. If this class meets twice a week, how long should Shiro expect each cl
    11·1 answer
  • Ask me anything ‍♂️ I’m bored
    13·2 answers
  • What is the result of subtracting the project costs from the benefits and then dividing by the costs
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!