2. You will enter the required information into the shaded cells.
3. The cells are coded:
a. T requires a text answer.
Instructions
Instructions: Please refer to your book for assistance with your homework. Post your work
in the worksheet. Highlight your final answer.
Answers:
a)What was the standard deviation of the market returns?
Find the standard deviation by completing the table with the appropriate formulas
Year
2004
2005
2006
2007
2008
12.5
6.4
15.8
5.6
-37.2
Total
Average
Std. Deviation
C
C
Difference from
Average
C
C
C
C
C
12.5
6.4
15.8
5.6
-37.2
Average
3.3
3.4
2.5
4.1
0.1
Instructions: Please refer to your book for assistance with your homework. Post your work
in the worksheet. Highlight your final answer.
Squared Difference
C
C
C
C
C
C
C
C
Instructions: Please refer to your book for assistance with your homework. Post your work
in the worksheet. Highlight your final answer.
Problem 7-11
Answers:
a.
b.
c.
Instructions: Please refer to your book for assistance with your homework. Post your work
in the worksheet. Highlight your final answer.
ge of historical returns.
Instructions: Please refer to your book for assistance with your homework. Post your work
in the worksheet. Highlight your final answer.
Problem 8-6
Suppose that the Treasury bill rate were 6% rather than 4%. Assume that the expected return on the market stays at 10%. Use
in Table 8.2 (p. 193) - also provided below.
Answers:
Formula
Calculation
Beta (B)
Revised T Bill
Risk-Free Rate
Market Return
Expected
return
Amazon
2.16
Ford
1.75
Dell
1.41
Starbucks
1.16
Boeing
1.14
Disney
0.96
Newmont
0.63
Exxon Mobil
0.55
0.5
Campbell Soup
0.3
B. Highest
C. Lowest
4%
Rate of return
Higher or lower?
6%
C
4%
8%
Rate of return
Higher or lower?
Instructions: Please refer to your book for assistance with your homework. Post your work
in the worksheet. Highlight your final answer.
Instructions: Please refer to your book for assistance with your homework. Post your work
in the worksheet. Highlight your final answer.
Problem 8-18
Some true or false questions about the APT:
a. The APT factors cannot reflect diversifiable risks.
b. The market rate of return cannot be an APT factor.
c. There is no theory that specifically identifies the APT factors.
be true but not very useful, for example, if the relevant factors change unpredictably.
Respond to each question - true or false - and why.
Answer:
a.
b.
c.
d.
d. The APT mo
Instructions: Please refer to your book for assistance with your homework. Post your work
in the worksheet. Highlight your final answer.