Submitted Apr 19, 2023 at 8:51am
Question 1
1 / 1 pts
Given the following regarding a share of stock and the overall market:
The risk-free rate of return is 3.1%
The beta of the stock is 1.73
The risk premium of the stock is 8%
What is the expected risk premium of the market?
(Answer to the nearest 0.01%)
Correct!
4.62
Correct Answer
4.62 margin of error +/- 0.05
UnansweredQuestion 2
0 / 1 pts
Given the following regarding a share of stock and the overall market:
The risk-free rate of return is 3.1%
The beta of the stock is 1.07
The expected market return is 11.22%
What is the expected return of the stock?
(Answer to the nearest 0.01%)
You Answered
Correct Answer
11.79 margin of error +/- 0.05
The formula for a stock's expected return is,
RStock = RRiskFree + Beta(RMarket - RRiskFree)
UnansweredQuestion 3
0 / 1 pts
Which of the following is what we use to measure the systematic risk of a stock or a portfolio?
Correct Answer
beta
standard deviation
covariance
variance
UnansweredQuestion 4
0 / 1 pts
Given the following regarding a share of stock and the overall market:
The risk-free rate of return is 1.1%
The beta of the stock is 1.12
The expected market premium is 8%
What is the expected return of the stock?
(Answer to the nearest 0.01%)
You Answered
Correct Answer
10.06 margin of error +/- 0.05
The formula for a stock's expected return is,
RStock = RRiskFree + (RPMarket * Beta)
UnansweredQuestion 5
0 / 1 pts
Given the following regarding a share of stock and the overall market:
The risk-free rate of return is 1.2%
The beta of the stock is 1.59
The expected market return is 10.6%
What is the expected risk premium of the stock?
(Answer to the nearest 0.01%)
You Answered
Correct Answer
14.95 margin of error +/- 0.05
The formula for a stock's risk premium is,
StockRP = (RMarket - RRiskFree) * Beta
UnansweredQuestion 6
0 / 1 pts
Given the following regarding a share of stock and the overall market:
The risk-free rate of return is 2.5%
The beta of the stock is 2.27
The expected return of the stock is 8%
What is the expected risk premium of the market?
(Answer to the nearest 0.01%)
You Answered
Correct Answer
2.42 margin of error +/- 0.05
Since we are given the return of the stock, we need to find the stock's risk premium.
StockRP = Rstock - RRiskFree
Then we can find the Market Risk Premium,
MarketRP = StockRP/Beta
*Stock Risk Premium (StockRP), Return of stock (Rstock), Risk-Free rate of return (RRiskFree),
Market Risk Premium (MarketRP)
UnansweredQuestion 7
0 / 1 pts
Given the following regarding a share of stock and the overall market:
The risk-free rate of return is 2.5%
The beta of the stock is 0.2
The expected market premium is 4%
What is the expected risk premium of the stock?
(Answer to the nearest 0.01%)
You Answered
Correct Answer
0.8 margin of error +/- 0.05
The formula for a stock's risk premium is,
StockRP = MarketRP * Beta
UnansweredQuestion 8
0 / 1 pts
Given the following regarding a share of stock and the overall market:
The risk-free rate of return is 1.2%
The beta of the stock is 0.45
The expected return of the stock is 2%
What is the expected return of the market?
(Answer to the nearest 0.01%)
You Answered
Correct Answer
2.98 margin of error +/- 0.05
To find the market's expected return,
RMarket = [(RStock - RRiskFree)/Beta] + RRiskFree
*Market Expected Return (RMarket), Stock Expected Return (RStock), Risk Free Rate
(RRiskFree)
UnansweredQuestion 9
0 / 1 pts
A stock with a level of systematic risk the same as that of the market has a beta that is
less than the beta of the risk-free asset.
Correct Answer
equal to one.
less than zero.
equal to zero.
A beta that is equivalent to the market's level of risk is equal to 1. Anything below would signify
that the stock is less risky than the market. Anything above would signify that the stock is more
risky than the market.
UnansweredQuestion 10
0 / 1 pts
Given the following regarding a share of stock and the overall market:
The risk-free rate of return is 2%
The beta of the stock is 1.39
The expected risk premium of the stock is 4%
What is the expected return of the market?
(Answer to the nearest 0.01%)
