Portfolio Betas & expected returns

Related BrainMass Solutions

• Portfolio risk and return

  If the risk free rate is 5% next year, and analysts expect that S&P500 index return will be 10% what will be the expected returns od stock DO, stock GDT and the portfolio? Apply CAPM model. Please see attached file.

• Why should a stock beta and expected return be related?

  Why should a stock beta and expected return be related while no such relationship exists between a stock's standard deviation and expected returns? Systematic risk drivers the expected returns.

• Security expected returns and betas in 3 well-diversified portfolios

  This gives the Portfolio a beta of 1.10 which is now equal to Security 3 The security expected returns and betas 3 well-diversified portfolio is determined.

• Portfolio return, Stock return, Leverage

  D Required returns have increased for stocks with betas greater than 1.0 but have declined for stocks with betas less than 1.0. E The required returns on all stocks have fallen by the same amount.

• Write the equation of the returns on your portfolio if you have 5 stocks or a very large # of stocks in it.

  Write the equation of the returns on your portfolio if you place in it a very large number of stocks that all have the same expected returns and the same betas. a.

• Holding Period Returns and Standard Deviation

  Given the betas for Wal-Mart and Target and using the above data for the S&P Index as a measure for the market portfolio expected return, estimate an appropriate required rate of return given the level of systematic risk for each stock.

• CAPM and Expected Return Problem

  Company Names Betas Expected Returns Cisco 2.03 23.27% Citigroup 1.36 17.24% Merck 0.4 8.60% Walt Disney 0.84 12.56% For the caluculations please see the attached spreadsheet.

• Financial Services questions: Relative Valuation, Analyzing a Portfolio, CAPM and more...

  Expected Returns - A stock has a beta of .7, the expected return on the market is 15%, and the risk-free rate is 6.5%. What must the expected return on this stock be? 10. Portfolio Weights A stock has a beta of .9 and expected return of 12%.

• Beta: general description of the theory, current examples and the way in which the theory impacts the business decisions of either the domestic or global financial manager.

  It is most appropriate for the advisor who seeks to estimate the expected returns on a portfolio.

• Risk and Return

  False The portfolio beta is the weighted sum of the individual Asset betas, according to the proportions of the Investments in the portfolio. The beta of the Treasury bills is zero.