6-10

a. From the price data here, compute the holding-period returns for Jazman and Solomon for periods 2 through 4

b. How would you interpret the meaning of a holding-period return?

6-12 Suppose you purchased 16 shares of Disney stock for $24.22 per share On May 1, 2012. On September 1 of the same year, you sold 12 shares of the stock for $25.68. Calculate the holding period dollar gain for the shares you sold, assuming no dividend was distributed and the holding period rate of return.

6-15 Using the CAPM estimate the appropriate required rate of return for the three stocks listed here given that the risk free rate is 5 percent and the expected return for the market is 12 percent.

6-16

a. Calculate the monthly holding period returns for Merck and the S&P 500 index.

b. What are the average monthly returns and standard deviation for each?

6-18

a. Compute a fair rate of return for Intel common stock which has a 1.2 beta. The risk free rate is 2 percent, and the market portfolio (New York Stock exchange stock) has an expected return of 11 percent.

b. Why is the rate you computed a fair rate?

6-20 Levine manufacturing inc. is considering several investments. The rate on Treasury bill is currently 2.75 percent, and the expected return for the market is 12 percent. What should be the required rates of returns for each investment (using the CAPM)?

6-22 The expected return for the general market is 12.8 percent, and the risk premium in the market is 9.3 percent. Tasaco, LBM, and Exxos have betas of 0.864, 0.693 and 0.575, respectively. What are the corresponding required rates of return for the three securities?

Subject | Business |

Due By (Pacific Time) | 11/14/2014 12:00 am |

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