assume that expected return of the stock A in Rachel's portfolio is 13.6% this year.The risk premium on the stock of the same industry are 4.8%.beta of the stock is 1.5 and the inflation rate was 2.7. a)Calculate the risk-free rate of return using capital market asset pricing model    please provide the workings for  finding risk free rate finding adjusted rate of return(inflation adjusted) finding Risk free rate of return using CAPM model

Q: . Mubita is contemplating on investing in Stocks A and B with the following probability…

A: The CAPM model that is capital asset pricing model gives the required rate on the stock based on the…

Q: During the coming year, the market risk premium (rm− rf), is expected to remain the same, while the…

A: The question is based on the concept of Financial analysis

Q: answer part A-D and include a short explanation for each part of how you arrived at your answer. A)…

A: Capital asset pricing model for computation of required rate of return: Here, Expected return is…

Q: Assume that expected return of the stock A in your portfolio is 14.6%. The risk premium on the…

A: CAPM is a financial model which shows the relation between risk and expected return of the…

Q: ) An analyst wants to evaluate portfolio X, using both the Treynor and Sharpe measures of portfolio…

A: Part (c) has been solved. Portfolio’s M2 is the excess return earned by adjusting the portfolio and…

Q: Example: Suppose you want to invest in one stock and one bond. The expected return and standard…

A: Given information : Asset Weight Expected return Standard deviation Stock  70% 9% 16% Bond…

Q: We have the following information on a portfolio consisting of Stocks A, B, and C:…

A: Annual expected portfolio return refers to the amount of profit that will be realized from portfolio…

Q: Marcus has an investment portfolio that paid the rate of return of 24.75%, -11%, - 30%, 19%, 15.5%,…

A: Arithmetic average is sum of all divided by number of return. Geometric return can be calculated by…

Q: An analyst wants to evaluate Portfolio X, consisting entirely of U.S. common stocks, using both the…

A: The Treynor measure (T) relates the rate of return earned above the risk‑free rate to the…

Q: Suppose that the risk-free rate is 3.00% per annum. In addition, assume that the market portfolio…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub- parts…

Q: Based on current dividend yields and expected capital gains, the expected rates or return on…

A: Capital asset pricing model can be used to study the how systematic risk on a particular asset is…

Q: The figure below shows plots of monthly rates of return on three stocks versus the stock market…

A: If the portfolio is well diversified and have only market risk in the portfolio where the portfolio…

Q: Given the following information, what is the expected return on a portfolio that is invested 30…

A: A combination of different types of securities for the investment is term as the portfolio.

Q: Which stock should have a higher actual return next year

A: The beta of a stock is the degree of responsiveness to movements in price with changes in the stock…

Q: Assume the market portfolio's and risk-free rate's projected returns are 13% and 3%, respectively.…

A: There are various portfolio performance measures and one such measure is Treynors' ratio. This ratio…

Q: Calculate covariance and coefficient of correlation between the returns of the stocks A and B.

A: Covariance is calculated by analyzing at-return surprises (standard deviations from the expected…

Q: You have just invested in a portfolio of three stocks. The amount of money that you invested in each…

A: The formulae for the calculation of Beta of portfolio:Beta of portfolio=∑(Height of stock*Beta of…

Q: - Calculate the average rate of return for each stock during the period 2x15 through 2x19. Assume…

A: Realized return of a portfolio means that return which is going to be received from the portfolio.…

Q: Consider the following probability distribution for stocks A and B:    State   Probability…

A: We can calculate expected return and standard deviation by using following formulas Expected return…

Q: The following data represent the probability distribution of the holding period returns for an…

A: Expected return = (R1 * P1) + (R2 * P2) + (R3 * P3) Where : R1 = Rate of return 1 P1 = Probability…

Q: If the expected rates of return on Portfolio A and B are 11% and 14% respectively and the Beta of A…

A: CAPM or Capital Asset Pricing Model is a model which defines the relationship between expected…

Q: Assume that expected return of the stock A in Rachel’s portfolio is 13.6% this year. The risk…

A: The risk-free rate represents the interest an investor would expect from an absolutely risk-free…

Q: Can you solve with details and please add a note and formulas,thank you. You own three stocks and…

A: The expected return of the portfolio is computed by: Expected return = weight of stock A ×Return on…

Q: Assume that ASX 300 Index represents the risky portfolio. Calculate the annual return for the period…

A: Annual return is a return percentage of profit or loss occurring in one year of holding period to…

Q: Compute the expected rate of return for Intel common stock, which has a 1.2 beta. The risk-free rate…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Stanislas Korowski owns a portfolio con- sisting of the following stocks below: Mytab PERCENTAGE OF…

A: Note: As per our guidelines, we can only answer first three subparts. Please post other subparts…

Q: Consider the following scenario analysis:       Rate of Return Scenario Probability Stocks Bonds…

A: Expected Return is average return that investor can earn considering different probabilities and…

Q: Suppose that the index model for stocks A and B is estimated from excess returns with the following…

A: The beta of A is 0.45 Beta of B is 1 The SD of A is 0.28 SD of B is 0.21 SD of market is 16%. Weight…

Q: Assume that using the Security Market Line (SML) the required rate of return (RA) on stock A is…

A: Because you have posted multiple questions, we will answer the first question only, for the…

Q: for next The risk-free rate, re is 9%. Your probability distribution for rM year is as follows:…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Consider an economy where Capital Asset Pricing Model holds. In this economy, stocks A and B have…

A: “Since you have posted a question with multiple subparts, we will solve first three subparts for…

Q: Assume that you have just received information from your investment advisor that your portfolio has…

A: Portfolio Investment is termed for investor holding whose funds are diversified in several assets…

Q: The Treasury bill rate is 4.9%, and the expected return on the market portfolio is 11.1%. Use the…

A: 1. Risk premium =expected return on the market  -  Treasury bill rate Risk premium = 11.1% - 4.9%…

Q: The following graph plots the current security market line (SML) and indicates the return that…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Consider two types of assets: market portfolio (M) and stock A. The expected return is 8% and…

A: Given: Market rate = 8% Risk free rate = 2% Standard deviation of market portfolio = 15% Standard…

Q: TABLE 1. Fim Portfolio Data - Expedel returns on cOMmponent stocks (%) in fundion of the state of…

A: We should first compute the expected return of the portfolio and its standard deviation. Then we…

Q: Below are the annual returns provided by TSCM. Calculate average annual return experienced by an…

A:

Q: During the year just ended, Anna Schultz's portfolio, which has a beta of 0.97, earned a return of…

A: Treynor's Ratio = (Average rate of portfolio-risk free rate)/Beta of the portfolio

Q: You have observed the following returns over time:                       Stock X…

A: Formulas:

Q: f D1 = $1.50 g (which is constant) = 6.5%, Po = $56, what is the stock's expected capital gains…

A: D1 = $ 1.50 g = 6.5% Po = $56

Q: . What is the rate of return on the portfolio in each scenario?

A: Portfolio is a collection of security or investments. It is desirable for the investors to invest…

Q: An analyst wants to evaluate Portfolio X consisting entirely of US common stocks, using both the…

A: Sharpe and Treynor ratios are calculated by the investors to determine the relationship between the…

Q: Your employer has asked you to investigate the firm’s portfolio risk and return. The portfolio…

A: State of economy Probability Stock-A Stock-B Stock-C Good 60.00% 3.00% 34.00% 70.00% Poor 40.00%…

Q: The data on the expected return of 2 stocks (M and C) along with the economic conditions and their…

A: Expected return of a stock is the minimum rate of return that an investor expects from the security…

Q: firm’s portfolio risk and return.

A: Portfolio's Risk and Returns: Portfolio's risk and return states the relationship between the…