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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Suppose that the Treasury bill rate is 6% and that the expected return on the market is 2%. Assume
that the expected return on the market stays at 10%. Use the following information.
| Â Â Stock | Beta (?) |
| Â Â A | 1.78 Â Â Â Â Â |
| Â Â B | 1.54 Â Â Â Â Â |
| Â Â C | 1.53 Â Â Â Â Â |
| Â Â D | 0.98 Â Â Â Â Â |
| Â Â E | 0.95 Â Â Â Â Â |
| Â Â F | 0.80 Â Â Â Â Â |
| Â Â G | 0.75 Â Â Â Â Â |
| Â Â H | 0.66 Â Â Â Â Â |
| Â Â I | 0.42Â Â Â Â Â |
| Â Â J | 0.40Â Â Â Â Â |
| Â | |
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| a. |
Calculate the expected return from H. (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
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| Â Â Expected return | % |
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| b. |
Find the highest expected return that is offered by one of these stocks. (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
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| Â Â Highest expected return | % |
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| c. |
Find the lowest expected return that is offered by one of these stocks. (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
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| Â Â Lowest expected return | % |
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| d. |
Assume that the expected market return stays at 10%. Would C offer a higher or lower expected return if the Treasury bill interest rate were 6% rather than 2%? |
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| e. | Assume that the expected market return stays at 10%. Would J offer a higher or lower expected return if the interest rate were 6% rather than 8%? | ||||
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