tent Assessments Communication Help Tine Left.1:18:27 Falah Al Mutlar Attempt 1

Question

tent Assessments Communication Help Tine Left.1:18:27 Falah Al Mutlar Attempt 1 Note It is reoommenšed Ut yu save your response as you complete each ouestion FIN 3950 Exam 2 Summer 2 (Junel 2018 Unless atherwise instructed, use two (2) decimal places for both percentages and dollar amounts. This is enforced When entering units, use % for percentages, S for dollar amounts, years for time and for times" (beta). Question 19 (4 points) A stock has a beta of 0.5. By how much would you expect its return to an average-risk stock were to change by -2.00 percent? change, if the return on Your Answer units Proviaus Poge Next Page Page 19 of 25 Go to Submit uig DOLL ro 4

Explanation / Answer

Return would decline by 1% Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars ke = Rf + Beta (Rm- Rf) If the return on average risk stock change by -2%, then Rm would decline by 2% If Rm would decline by 2% then Rm- Rf would also decline by 2% It means ke would decline by 1% since Beta would be multiplied by 2% less which means .5*2% = 1%

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