You hear on the news that

Finance May 07, 2021

You hear on the news that. the SSP 500 was down 2.9% today relative to the risk-free rate (the market's excess return was -2.9%). You are thinking about your portfolio and your investments fn Hewlett Packard and Proctor and Gamble.

a) If Hewlett Packard's beta is 1.1 what is your best guess as to Hewlett Packard, excess retum today?

b) If Proctor and Gamble, beta is 0.5, what is your best guess as to P&G, excess return today?

Expert Solution

a) Computation of the Hewlett Packard's excess return:-

Excess return = Beta * Market return

= 1.1 * -2.9%

= -3.19%

b) Computation of the P&G's excess return:-

Excess return = Beta * Market return

= 0.5 * -2.9%

= -1.45%

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