B 01
Require Rate of Return is formulated as: Riskfree Rate + Beta(Risk Premium) Required Rate of Return = 4.25 + 1.4 (5.50) = 11.95%
True
The beta score is a calculation of a security's tendency to change according to the prevailing market movements. A regression analysis of previous performances is calculated in order to reach a beta score.
It is the risk which is due to the factors which are beyond the control of the people working in the market and that's why risk free rate of return in used to just compensate this type of risk in market. This is the risk other than systematic risk and which is due to the factors which are controllable by the people working in market and market risk premium is used to compensate this type of risk. Total Risk = Systematic risk + Unsystematic Risk As systematic risk is beyond the control of people working in market that;s why it is defenately not the relevent risk because anything not controllable is irrelevant and that's why unsystematic risk is the relevant risk because it is in the control of investor to in which security to invest or not.
market share v = (actual market share % - budgeted market share %)*total market quantity*budgeted weighted average contribution margin per unit+ favorable- unfavorable
Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)
Beta is the measure of a security's volatility compared to the volatility of the market as a whole. Therefore, the market as a whole has a beta of 1.
The CAPM is a model for pricing an individual security (asset) or a portfolio. For individual security perspective, we made use of the security market line (SML) and its relation to expected return and systematic risk (beta) to show how the market must price individual securities in relation to their security risk class. The SML enables us to calculate the reward-to-risk ratio for any security in relation to that of the overall market. Therefore, when the expected rate of return for any security is deflated by its beta coefficient, the reward-to-risk ratio for any individual security in the market is equal to the market reward-to-risk ratio
Technical analysis is the kind of stock market analysis that focuses on overall trends in the market.
No- the market risk premium is the slope of the Security Market Line (SML).
The CAPM relates the expected return on a security to that of the overall market portfolio. A highly volatile security will have a high covariance with the market portfolio. Since beta equals the covariance of the security with the market portfolio divided by the variance of the market portfolio, the result is a high value of beta. When this high value of beta is plugged into the CAPM formula, all else not changed, the required return on the security (ra) is going to increase, implying investors require a higher return to hold a highly volatile security. t
a security's risk is divided into systematic (Market risk) and Unsystematic risk (Diversifiable risk), the market risk is the risk inherent to the security, it is attributed to macro economic factors such as inflation, war etc. and affects all securities in the market and so cannot be diversified away. Market risk of a security is measured and reflected by the Beta coefficientwhich is an index that measures the security's volatility to market movements i.e. how much the returns of the security will vary if their changes in the market
Require Rate of Return is formulated as: Riskfree Rate + Beta(Risk Premium) Required Rate of Return = 4.25 + 1.4 (5.50) = 11.95%
Overall trends in the market
A new issue of a security with a very short maturity
As of July 2014, the market cap for United Security Bancshares (UBFO) is $89,354,950.10.
As of July 2014, the market cap for Strattec Security Corporation (STRT) is $235,078,772.50.