What are high beta stocks
[DOC File]CHAPTER 8
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β 1→high beta stocks, more risky. Identification of under/over pricing It can be identified in 2ways – (a) by comparing fair price with market price, (b) by comparing required return with expected return
Chapter 9
You put half your money in large stocks with a beta of 1.8 and an expected return of 13%. You invest one eighth of your money in a well-diversified portfolio like the S&P 500 index with a beta of 1 and an expected return of 9%, and finally, one eight of your money is invested in risk free T-bills. The expected return on the T-bills is 4%.
[DOC File]Finance 332 - Exam 2
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"Stocks that move perfectly with the market have a beta of 1. Betas get higher as volatility goes up and lower as it goes down. Thus, Southern Co., a utility whose shares have traded close to $12 for most of the past three years has a low beta.
[DOC File]Tulane University
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This says that when the LEI moves upward, high beta stocks tend to outperform low beta stocks, and high-leverage stocks outperform low-leverage stocks. The Size factor, on the other hand, is negatively correlated, which says that small-cap stocks tend to outperform large-cap stocks when the LEI moves upward.
[DOC File]CHAPTER 5
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You note the following: expected return on the market = 10%, expected inflation rate = 4%, risk free rate = 5%, the beta of a stock relative to the market is 1.2, and the beta of this stock relative to inflation is 0.5.
[DOCX File]Rutgers University
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This means high-beta stocks experience greater increases in their required returns, while low-beta stocks experience smaller increases in their required returns. Statement a is incorrect. Statement b is correct; stocks with a beta less than 1 increase by less than the increase in the market risk premium, and vice versa.
High-Beta Stocks for a Trade
The high beta (higher than any individual beta) results from the short positions in the relatively low beta stocks and the long positions in the relatively high beta stocks. (2(e) = [(–0.6142)2×3364] + [1.12652×5041] + [(–1.2181)2×3600] + [1.70582×3025] = 21,809.6 ( …
[DOC File]Problem 1:
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High P/E ratios are typically associated with stocks that display: ... b. does not apply to low beta stocks. c. is directly related to changes in the interest rate. ... 18.An analyst employed by a pension fund to search for stocks for the fund to invest in would be referred to …
[DOCX File]Texas Christian University
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Dec 31, 2003 · Stock A has a beta of 1.1, while Stock B has a beta of 0.9. The market risk premium, kM - kRF, is 6 percent. The risk-free rate is 6.3 percent. Both stocks have a dividend, which is expected to grow at a constant rate of 7 percent a year. Assume that the market is in equilibrium. Which of the following statements is most correct? a.
[DOCX File]WordPress.com
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1. Often “high-flyer” stocks have high P/E ratios, yet some analysts seek low P/E stocks. Are high or low P/E ratios more reliable as tools for valuation of stocks? Answer: Low P/E ratios are likely to be more stable than high P/Es, and, therefore, more reliable in valuation models.
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