0
14% average, so some years you will get 7% and other years you will get 21% and everywhere in between, but over 10-15 years you will more than likely average 14%. Day tading is never a good idea, always buy stock for the long haul. Also spread your assets, put them in multiple companies, for example if you shop at Walmart, eat mcDonalds, and use H & R Block for your taxes those are three good places to invest. This can be done for anywhere you spend money regularly.
What else can I help you with?
Risk free rate is 5 and the market risk premium is 6 What is the expected return for the overall stock market What is the required rate of return on a stock that has a beta of 1.2?
Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)
How do you perform an average rate of return calculation for an investment portfolio?
To calculate the average rate of return for an investment portfolio, you add up the returns of all the investments in the portfolio over a specific period of time and then divide that total by the number of investments. This gives you the average rate of return for the portfolio.
Does the capital asset pricing model help us to get required rate of return or expected rate of return?
expected rate of return
How does capital market line differ from security market line?
From Investopedia.com: The capital market line (CML) is a line used in the capital asset pricing model to illustrate the rates of return for efficient portfolios depending on the risk-free rate of return and the level of risk (standard deviation) for a particular portfolio. The CML is derived by drawing a tangent line from the intercept point on the efficient frontier to the point where the expected return equals the risk-free rate of return. The CML is considered to be superior to the efficient frontier since it takes into account the inclusion of a risk-free asset in the portfolio. The capital asset pricing model (CAPM) demonstrates that the market portfolio is essentially the efficient frontier. This is achieved visually through the security market line (SML). The security market line is a line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky marketable securities. The SML essentially graphs the results from the capital asset pricing model (CAPM) formula. The x-axis represents the risk (beta), and the y-axis represents the expected return. The market risk premium is determined from the slope of the SML. The security market line is a useful tool in determining whether an asset being considered for a portfolio offers a reasonable expected return for risk. Individual securities are plotted on the SML graph. If the security's risk versus expected return is plotted above the SML, it is undervalued because the investor can expect a greater return for the inherent risk. A security plotted below the SML is overvalued because the investor would be accepting less return for the amount of risk assumed.
What is the personalized rate of return for my investment portfolio?
The personalized rate of return for your investment portfolio is the percentage increase or decrease in the value of your investments over a specific period, taking into account the individual assets and their performance in your portfolio.
Risk free rate is 5 and the market risk premium is 6 What is the expected return for the overall stock market What is the required rate of return on a stock that has a beta of 1.2?
Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)
What is the expected rate of return for Industries that has a beta of 0.71 when the risk free rate is 0.09 and the market rate of return is expected to be 0.13?
11.84%
What is the return on the market portfolio if the risk-free rate is 5.3 percent. If a stock has a beta of 1.8 and a required rate of return of 12.0 percent and the market is in equilibrium?
In a market in equilibrium, the Capital Asset Pricing Model (CAPM) can be used to determine the return on the market portfolio. The formula is given by: [ R_m = R_f + \beta(R_m - R_f) ] Where ( R_m ) is the return on the market portfolio, ( R_f ) is the risk-free rate, and ( \beta ) is the stock's beta. Given the risk-free rate of 5.3 percent and a stock with a beta of 1.8 and a required return of 12.0 percent, we can rearrange the formula to solve for ( R_m ). Solving yields ( R_m ) = 11.5 percent, indicating the market portfolio's return.
Sharpex index model of optimum portfolio with examples?
The Sharpe Index Model, also known as the Capital Asset Pricing Model (CAPM), is used to find the optimal portfolio by balancing risk and return. It measures the excess return of a portfolio compared to a risk-free rate per unit of risk (beta). An example would be constructing a portfolio of diversified assets that maximizes return for a given level of risk, based on the relationship between the portfolio's expected return, the risk-free rate, and the market risk premium.
The market risk premium is measured by?
The market risk premium is measured by the market return less risk-free rate. You can calculate the market risk premium as market risk premium is equal to the expected return of the market minus the risk-free rate.
How is expected rate of return calculated from average rate of return on investment and standard deviation?
The expected rate of return is simply the average rate of return. The standard deviation does not directly affect the expected rate of return, only the reliability of that estimate.
Assume that the risk free rate is 6 percent and the expected return on the market is 13 percent what is the required rate of return on a stock with a beta of 0.7?
14
How do you perform an average rate of return calculation for an investment portfolio?
To calculate the average rate of return for an investment portfolio, you add up the returns of all the investments in the portfolio over a specific period of time and then divide that total by the number of investments. This gives you the average rate of return for the portfolio.
Does the capital asset pricing model help us to get required rate of return or expected rate of return?
expected rate of return
What is the risk-free rate if the expected return is 20.4 and beta is 1.6 and expected market return is 15?
expected market return = risk free + beta*(market return - risk free) So by putting in values: 20.4 = rf+ 1.6(15-rf) expected market return = risk free + beta*(market return - risk free) So by putting in values: 20.4 = rf+ 1.6(15-rf) where rf = risk free 20.4 - 24 = rf - 1.6rf -3.6 = -0.6rf rf = 6
If the risk-free rate is .06 and expected return on the market is .13. What is the requred rate of return on a stock that has a beta of 7?
49%....in reality no stock has a beta of 7
How does capital market line differ from security market line?
From Investopedia.com: The capital market line (CML) is a line used in the capital asset pricing model to illustrate the rates of return for efficient portfolios depending on the risk-free rate of return and the level of risk (standard deviation) for a particular portfolio. The CML is derived by drawing a tangent line from the intercept point on the efficient frontier to the point where the expected return equals the risk-free rate of return. The CML is considered to be superior to the efficient frontier since it takes into account the inclusion of a risk-free asset in the portfolio. The capital asset pricing model (CAPM) demonstrates that the market portfolio is essentially the efficient frontier. This is achieved visually through the security market line (SML). The security market line is a line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky marketable securities. The SML essentially graphs the results from the capital asset pricing model (CAPM) formula. The x-axis represents the risk (beta), and the y-axis represents the expected return. The market risk premium is determined from the slope of the SML. The security market line is a useful tool in determining whether an asset being considered for a portfolio offers a reasonable expected return for risk. Individual securities are plotted on the SML graph. If the security's risk versus expected return is plotted above the SML, it is undervalued because the investor can expect a greater return for the inherent risk. A security plotted below the SML is overvalued because the investor would be accepting less return for the amount of risk assumed.
