Problem 8.08 – Beta Coefficient for Stock L
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition, 10th Edition, and 11th Edition
Determine the beta coefficient for Stock L that is consistent with equilibrium.
Determine the beta coefficient for Stock L that is consistent with equilibrium.
How much does the riskier stock’s required return exceed the less risky one?
Given both beta for both companies, the required return, risk-free rate… find out how much Beale’s required return exceeds Foley’s?
Given a rate of inflation, real risk-free rate, market risk premium, the company beta, and average realized rate of return… determine the required return.
Given rRF, rM and bi… determine the required return for stock I. After, you are asked to show the impact on rM and ri when the risk-free rate changes. Finally, you are asked to calculate the changes in ri as a result of changes in rM.
Given a table of expected returns, standard deviations, and betas for stocks A, B, and C… determine the market risk premium, the beta for Fund P, and the required return on Fund P. Given that the three stocks are not perfectly correlated… comment on the portfolio’s standard deviation given that the three stocks are not perfectly correlated.
Given the diversified portfolio with an investment, the portfolio’s beta, the beta of the stock sold, and the beta of the stock bought… find your portfolio’s new beta.
Given the beta for both companies, risk-free rate, expected rate of falling inflation in percentage points, and what the required rate of the market falls to… find the difference in the required returns for HRI and LRI?
Given the value of the portfolio, the portfolio beta, required return, risk-free rate, and the amount you receive… find the required return on your portfolio if you invest in the stock.
Given the portfolio value, beta, risk-free rate, market risk premium, manager’s expected amount to receive, and what the manager wants the required return to be… find the average beta of the new stocks added to the portfolio.