1) The table below shows expected rates of return for three stocks and their weight in a portfolio: Stock A Stock B Stock C Portfolio weights
View complete question 1) The table below shows expected rates of return for three stocks and their weight in a portfolio: Stock A Stock B Stock C Portfolio weights 0.3 0.2 0.5 State Probability Expected returns Recession 0.3 0.05 0.03 0.12 Boom 0.7 0.1 0.05 0.13 What is the approximate expected portfolio return? a) 8% b) 9% c) 10% d) 11% e) 12% f) Other, specify 2) The fact that less than half of all equity fund managers beat the market in most years indicates that the stock market is _____. a) profitable for more competent managers b) largely efficient c) largely inefficient d) ripe for disruption e) rife with insider trading f) Other, specify. 3) When WACC is used to evaluate new project ideas, the capital structure weights to be used in the WACC calculation should ideally reflect _____. a) observed book values b) target market values c) target book values d) observed market values e) historical values f) Other, specify. 4) Suppose that an investor holds a stock which has a rate of return based on a single-factor model. The model equation can be presented as: r = E(r) + _F + e, where F is the unanticipated growth in GDP. The market consensus about the GDP growth rate is 4%. The investor currently expects to earn a 9.4% return. The stock's _ value is 1.2. The next day you learn that new macroeconomic information suggests that GDP growth will be 5%, which is higher than the market consensus. What will be the revised approximate estimate of the stock's expected rate of return? a) 9% b) 10% c) 11% d) 12% e) 13% f) Other, specify. 5) Combination Algebraic/Short Essay a) (2 points) Assume CAPM is correct (the market is the tangency portfolio), and all securities are priced correctly. Fill in the blanks. Security Expected Variance Standard Correlation BETA Returns Deviation (with Market) Market 0.08 ________ 0.30 ________ ________ Risk-free 0.04 ________ _______ 0.0 ________ Stock D ________ ________ 0.50 ________ 0.9 Stock E ________ ________ 0.70 0.40 ________ b) (1 pt. – 1 page) While on Spring break visiting New Zealand, you encounter a little man with hairy feet, named Bilbo. He takes a liking to you and can not resist peppering you with questions about the world of finance. He asks, what is CAPM? What is APT? Does wizardry make the firm specific risk go away? Where does it go? Before you can answer, another strange fellow appears, murmuring about his precious and Bilbo disappears. Assuming Bilbo will return: Compose your answer in an essay or table as follows: Compare and contrast CAPM and APT, focusing on these four areas: 1) major assumptions, 2) conceptual similarities and differences, and 3) empirical usefulness. 4) Explain where the firm specific risk goes.

View less

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more