# Suppose the quantity demanded for a security is

Suppose the quantity demanded for a security is
BD = 100  0.1b,
and the quantity supplied of the security is
BS = 50 + 0.1b,
where b is the price of the security in dollars.

a. Calculate the equilibrium price and quantity of the security.

b. Suppose demand increases by 50, so that BD = 150  0.1b. Now, calculate the new equilibrium price and quantity of the security.
Consider three alternative bonds that you might invest in, each of which matures in one year. The following table shows the probability that you will receive each possible return. For example, if you buy bond A, the probability is 90 percent that your return will be 20 percent and the probability is 10 percent that your return will be 100 percent (in other words, you lose the entire amount invested).

Bond Probability Return
Bond A 90% 20%
10% 100%

Bond B 75% 40%
25% 40%

Bond C 60% 10%
40% 10%

a. Calculate the expected return for all three bonds in percentage terms.

b. The standard deviations of the returns on these bonds are: Bond A, 36.0 percent; Bond B, 34.6 percent; Bond C, 9.8 percent. If you are extremely risk averse, which of the three bonds would you buy? Why?

c. Would a risk-averse investor ever buy Bond A instead of one of the other bonds? Why or why not?
Suppose that the price of a stock is \$50 at the beginning of a year and \$53 at the end of the year, and it pays a dividend of \$2 during the year.

a. What is the stock’s current yield?

b. What is the stock’s capital-gains yield?

c. What is the stock’s return?
Suppose an investor purchased 100 shares of JDSU stock at a price of \$50 per share on December 31, 2011. On December 31, 2012, JDSU paid dividends of \$1.50 per share, and the investor received the dividends, then sold the stock at a price of \$65 per share.

a. If there were no taxes or inflation, what was the total return?

b. If there were no taxes, but inflation was 3.5 percent, what was the real return?

c. If the tax rate was 15 percent on dividends and capital gains, what was the after-tax real return?

Write the equation for the capital-asset pricing model.

Describe, in words, what the CAPM is trying to explain, and describe each element of the equation in part a.

Use the capital-asset pricing model to predict the returns next year of the following stocks, if you expect the return to holding stocks to be 12 percent on average, and the interest rate on three-month T-bills will be 2 percent. Show your calculations.

A stock with a beta of 0.3

A stock with a beta of 0.7

A stock with a beta of 1.6

Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.

### Free-revision policy

The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.

The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.

### Fair-cooperation guarantee

By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors: