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    Stock's beta, present value of an ordinary annuity

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    1) Stock A has a beta = 0.8, while Stock B has a beta = 1.6. Which of the following statements is most correct?

    a. Stock B's required return is double that of Stock A's.
    b. An equally weighted portfolio of Stock A and Stock B will have a beta less than 1.2.
    c. If market participants become more risk averse, the required return on Stock B will increase more than the required return for Stock A.
    d. All of the answers above are correct.
    e. Answers a and c are correct.

    2) Which of the following statements is most correct?

    a. The typical R2 for a stock is about 0.3 and the typical R2 for a portfolio is about 0.3.
    b. The typical R2 for a stock is about 0.94 and the typical R2 for a portfolio is about 0.6.
    c. The typical R2 for a stock is about 0.3 and the typical R2 for a portfolio is about 0.94.
    d. The typical R2 for a stock is about 0.94 and the typical R2 for a portfolio is about 0.94.
    e. The typical R2 for a stock is about 0.6 and the typical R2 for a portfolio is about 0.6.

    3) What is the present value of a 5-year ordinary annuity with annual payments of $200, evaluated at a 15 percent interest rate?

    a. $ 670.43
    b. $ 842.91
    c. $1,169.56
    d. $1,348.48
    e. $1,522.64

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    https://brainmass.com/business/annuity/stock-s-beta-present-value-of-an-ordinary-annuity-40169

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    Stock A has a beta = 0.8, while Stock B has a beta = 1.6. Which of the following statements is most correct?

    a. Stock B's required return is double that of Stock A's.
    b. An equally weighted portfolio of Stock A and Stock B will have a beta less than 1.2.
    c. If market participants become more risk averse, the required return on Stock B will increase more than the required return for ...

    Solution Summary

    Answers 3 Multiple Choice Questions on Stock's beta, R2 for a stock and a portfolio, present value of an ordinary annuity

    $2.19

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