Week 4 Assignment

Chapter 24 Question24-2 page 964
earnest A has an expected locate of return of 6%, a standard departure of returns of 30%, a correlation coefficient with the market of-0.25, and a genus Beta coefficient of -0.5. Security B has an expected return of11%, a standard deviation of returns of 10%, a correlation with the market of0.75, and a genus Beta coefficient of 0.5. Which security is more risky? Why?
Using SML: rA= rrf + (rm rrf)bi
Security A is riskier because of its negative correlation to the market. Also its beta is negative causing to believe its risk will annex over time.
Chapter 24 Question24-8 page 966-967
You are given the following(a) set of data:
Historical Rates of Return
Year big board Stock Y
1 4.0% 3.0%
2 14.3 18.2
3 19.0 9.1
4 -14.7 -6.0
5 -26.5 -15.3
6 37.2 33.1
7 23.8 6.1
8 -7.2 3.



2
9 6.6 14.8
10 20.5 24.1
11 30.6 18.0
Mean =9.8% 9.8%
? = 19.6% 13.8%
a. Construct a scatter plat arrangementing the relationship between returns on Stock Y and the market. Use a spreadsheet or a calculator with a linear regression function to estimate beta.
? = 0.62
b. Give a verbal interpretation of what the regression line and the beta coefficient show about Stock Ys volatility and sexual intercourse risk as compared with...If you want to get a full essay, order it on our website: Orderessay



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