Math Problem Statement
Data table
(Click on the following icon in order to copy its contents into a spreadsheet.)
Company
Infront AnalyticsInfront Analytics
(Infront.comInfront.com)
Computers and Software
Apple Inc.Apple Inc.
(APPLAPPL)
1.091.09
Dell TechnologiesDell Technologies
(DELLDELL)
1.161.16
MicrosoftMicrosoft
(MSFTMSFT)
1.021.02
Utilities
American Electric Power Co.American Electric Power Co.
(AEPAEP)
0.490.49
Duke Energy Corp.Duke Energy Corp.
(DUKDUK)
0.880.88
Centerpoint EnergyCenterpoint Energy
(CNPCNP)
1.34(Related to Checkpoint 8.3)**** (Analyzing systematic risk and expected rates of return)**** The following table,
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contains beta coefficient estimates for six firms. Calculate the expected increase in the value of each firm's shares if the market portfolio were to increase by 10 percent. Perform the same calculation where the market drops by 10 percent. Which set of firms has the most variable or volatile stock returns?
(Hint:
Use at least four decimal places in all calculations.)
Question content area bottom
Part 1
Input the expected increase in the value of each firm's shares if the market portfolio were to increase by 10%. (Round each answer to two decimal places.)
Part 2
Part 3
Part 4
Part 5
Part 6
Company
Infront AnalyticsInfront Analytics
(Infront.comInfront.com)
Beta Estimate
Expected Increase
Computers and Software
Apple Inc.Apple Inc.
(APPLAPPL)
1.091.09
10.9010.90%
Dell TechnologiesDell Technologies
(DELLDELL)
1.161.16
11.6011.60%
MicrosoftMicrosoft
(MSFTMSFT)
1.021.02
10.2010.20%
Utilities
American Electric Power Co.American Electric Power Co.
(AEPAEP)
0.490.49
4.904.90%
Duke Energy Corp.Duke Energy Corp.
(DUKDUK)
0.880.88
8.808.80%
Centerpoint EnergyCenterpoint Energy
(CNPCNP)
1.341.34
13.4013.40%
Part 7
Input the expected decrease in the value of each firm's shares if the market portfolio were to decrease by 10%. (Round each answer to two decimal places.)
Company
Infront AnalyticsInfront Analytics
(Infront.comInfront.com)
Beta Estimate
Expected Decrease
Computers and Software
Apple Inc.Apple Inc.
(APPLAPPL)
1.091.09
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Solution
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Math Problem Analysis
Mathematical Concepts
Finance
Expected Return
Market Volatility
Formulas
Expected Change = Beta * Market Change
Theorems
Capital Asset Pricing Model (CAPM)
Suitable Grade Level
Undergraduate (Finance or Economics)
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