Condition Probability Grn Bond Stock A Stock B Market Recession 0.1 8.0% -22% 28% -13% Below average 0.2 8.0% -2% 14.7% 1% Average 0.4 8.0% 20% 0% 15% Above average 0.2 8.0% 35% -10% 29% Boom 0.1 8.0% 50% -20% 43% Expected Return 8% 17.4% 1.74% ? Standard Deviation 0% ? 13.36% 15.34% Beta 0 1.29 ? 1 Required Construct the SML of the above four alternative. Clearly indicate stock A and stock B have been under/over or fairly priced.
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
|
Condition |
Probability |
Grn Bond |
Stock A |
Stock B |
Market |
|
Recession |
0.1 |
8.0% |
-22% |
28% |
-13% |
|
Below average |
0.2 |
8.0% |
-2% |
14.7% |
1% |
|
Average |
0.4 |
8.0% |
20% |
0% |
15% |
|
Above average |
0.2 |
8.0% |
35% |
-10% |
29% |
|
Boom |
0.1 |
8.0% |
50% |
-20% |
43% |
|
Expected Return |
|
8% |
17.4% |
1.74% |
? |
|
Standard Deviation |
|
0% |
? |
13.36% |
15.34% |
|
Beta |
|
0 |
1.29 |
? |
1 |
Required
Construct the SML of the above four alternative. Clearly indicate stock A and stock B have been under/over or fairly priced.
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