Max Guldenstern, a stock analyst for HiAlpha Securities, is estimating returns for Elsinor Realty. Given the following information, the expected return for Elsinor is closest to: Scenario Probability Elsinor Boom 35% 15% Neutral 25% 7% Bust 40% 2% O A. 8.00%. O B. 12.00% O C.7.80%.
Q: According to MSN money, the stock of Orange Corporation has a beta of 1.5, but according to Yahoo…
A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…
Q: a) The expected return of Stock A b) The expected return of Stock B c) The expected return of…
A: The expected return on the portfolio is the weighted average of the return generated from the…
Q: Historical nominal returns for a company have been 16% and -40%. The nominal returns for the market…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: The Rhaegel Corporation's common stock has a beta of 1.1. If the risk-free rate is 4.2 percent and…
A: The cost of equity capital is the sum of risk-free rate plus beta. It is calculated as follows: Cost…
Q: The following table is an analyst's best guess for the likelihood of various states of the economy…
A: Economy Probability (%) Ideal 0.2 20.0 Good 0.4 15.0 Fair 0.3 8.0…
Q: FlavR Co stock has a beta or 2.04, the current risk-free rate is 2.04 percent, and the expected…
A: In the given question we are require to calculate the FlavR co's cost of equity: We can calculate…
Q: he financial controller is considering the use of the Capital Asset Pricing Model as a surrogate…
A: CAPM: Capital asset pricing model Under this model ris free return is used along with Beta and…
Q: FlavR Co stock has a beta of 2.15, the current risk-free rate is 2.15 percent, and the expected…
A: In the given question we are require to calculate the FlavR co's cost of equity: We can calculate…
Q: Diddy Corp. stock has a beta of 1.1, the current risk-free rate is 5 percent, and the expected…
A: The cost of equity can be calculated as per CAPM equation
Q: Plaid Pants, Inc. common stock has a beta of 0.90, while Acme Dynamite Company common stock has a…
A: The question is multiple choice question.Plaid Pants, Inc. common stock has a beta of 0.90, while…
Q: Blue Bell stock is expected to return 8.4 percent in a boom, 8.9 percent in a normal economy, and…
A: Standard deviation refers to the variation or dispersion in the values of a data set. Standard…
Q: Expected dividend yield 5%
A: Ans. D.stock X pays higher dividend per share than stock y
Q: The Swanson Corporation's common stock has a beta of 1.07. If the risk-free rate is 3.4 percent and…
A: Cost of equity here will be the required rate of return. We need to calculate cost of equity or…
Q: JaiLai Cos. stock has a beta of 0.8, the current risk-free rate is 6.2 percent, and the expected…
A: The provided information are: Beta = 0.80 Expected return = 12% Risk free rate = 6.2%
Q: Porter Plumbing's stock had a required return of 11.75% last year, when the risk-free rate was 5.50%…
A: Required Return = Risk free Rate + beta * (Market Risk Premium)
Q: Based on the following information Calculate State of Economy Probability of State of Economy Rate…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Based on the following information Calculate State of Economy Probability of State of Economy…
A: NOTE: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts…
Q: A small market consists of three stocks, A, B, and C. and their financial data and projection are…
A: Working note:
Q: The Rhaegel Corporation's common stock has a beta of 1.5. If the risk-free rate is 6 percent and the…
A: There are several methods for the calculation of cost of capital. All these methods are estimating…
Q: An analyst has modeled the stock of a company using a FamaFrench three-factor model and has…
A: Computation of predicted Return and unexplained Return is shown below: Hence, predicted return is…
Q: The Angelina Corporation's common stock has a beta of 1.8. If the risk-free rate is 4.4 percent and…
A: Cost of equity = Risk free rate + (Expected market return - Risk free rate) * Beta
Q: A small market consists of three stocks, A, B, and C. and their financial data and projection are…
A: Computation:
Q: Linke Motors has a beta of 1.30, the T-bill rate is 3.00%, and the T-bond rate is 6.5%. The annual…
A: according to SML model firms required return =rf+beta ×rm-rf where, rf= risk free rate rm= market…
Q: Silver Industries' Y shares have an expected return of 15%, a beta coefficient of 0.8 and a standard…
A: For the given risk and return, Comparison between two shares can be made basis coefficient of…
Q: Tiger Corp's stock had a required return of 11.75% last year, when the risk-free rate was 4.50% and…
A: The rate of return is the amount that the investors are expected against the amount invested.…
Q: need help on all
A: a.SmileWhite:Beta = 1.1Risk-Free Rate = 3.5%Expected Market Return = 15.5% Calculation of Required…
Q: A stock analyst at JP Dealers believes that a stock will earn the following returns next period…
A: To Find: Expected return
Q: The Rhaegel Corporation's common stock has a beta of 11. If the risk-free rate is 5.1 percent and…
A: Given, Beta = 1.1 Risk-free rate (Rf) = 5.1% Expected return of the market(Rm) = 13%
Q: You expect the risk-free rate (RFR) to be 3 percent and the market return to be 10 percent. You also…
A: If Capital Asset Pricing Model hold good Required Return = Risk Free rate + (market Return - Risk…
Q: What is the company's new required rate of return?
A: Information Provided: Expected return = 13.75% Risk free rate = 3% Market risk premium = 4.75% New…
Q: ou were analyzing a stock and came up with the following probability distribution of the stock…
A: Coefficient of variation = Standard deviation / Expected return
Q: Porter Plumbing’s stock had a required return of 11.75% last year, when the risk-free rate was 5.50%…
A: The required return or theoretical expected return on a company's stock is usually calculated using…
Q: Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in…
A: Answer : The correct answer is b. One year from now, Stock X's price is expected to be higher than…
Q: What is the value of a common stock if: a. the firm's earnings and dividends are growing annually…
A: We need to use constant growth model to calculate valuation stock. The equation Stock price(P0)…
Q: Assume the risk-free rate is 3% and the market return is 10%. Stock X Stock Y Stock Z Beta 0.65 0.90…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Consider the estimated beta values as of June 30, 2011, for the followingcompanies:…
A: Capital Asset Pricing Model or CAPM used to describe for the relationship between an expected return…
Q: FlavR Company stock has a beta of 2.14, the current risk-free rate is 2.14 percent, and the expected…
A: Beta = 2.14 Risk free rate = 2.14% Market return = 9.14%
Q: You have assigned the following values to these three firms: Price Upcoming Dividend…
A: The formula to calculate required return using CAPM model is given below:
Q: The common stock of Peeta Inc. has an expected return of 15.0%, the risk-free rate is 3.20%, and the…
A: Calculate the beta as follows:
Q: The Rhaegel Corporation's common stock has a beta of 1.1. If the risk-free rate is 5.1 percent and…
A: In this we have to use capital assets pricing model to calculate the cost of equity.
Q: What should be the market price of the stock? $ If the current market price of the stock is…
A: As per our policy we only answer three subparts of any questions: Information Provided: Risk-free…
Q: Use the following forecasted financials: (Certain cells were left intentionally blank by asker)…
A: CAPM Model The Capital Asset Pricing Model (CAPM) is a mathematical model that describes the…
Q: The Fraber Corporation's common stock has a beta of 0.6. If the risk-free rate is 1.7% and the…
A: Given:Fraber corporations common stock:Beta=0.6Risk free rate=1.7%Expected return on the…
Q: Mika Corporation's stock had a required return of 11.75% last year, when the risk-free rate was…
A: Beta is a numerical value that calculates a stock's fluctuations against movements in the stock…
Q: Ice Company stock has a beta of 1.92, the current risk-free rate is 5.17 percent, and the expected…
A: Beta = 1.92 Risk free rate = 5.17% Market return = 15.17%
Q: You were analyzing a stock and came up with the following probability distribution of the stock…
A: Formulas:
Q: Diddy Corp. stock has a beta of 1.3, the current risk-free rate is 7 percent, and the expected…
A: Given: Risk free rate = 7% Beta = 1.3 Market return = 12.50%
Q: An investment analyst estimates the following probabilities of return depending on the state of the…
A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- K (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Probability 0.20 0.60 0.20 Common Stock B Return 13% 17% 18% Probability 0.10 0.40 0.40 0.10 (Click on the icon in order to copy its contents into a spreadsheet.) Return -7% 5% 16% 21% www a. Given the information in the table, the expected rate of return for stock A is 16.40 %. (Round to two decimal places.) The standard deviation of stock A is 1.74 %. (Round to two decimal places.) b. The expected rate of return for stock B is 9.8 %. (Round to two decimal places.) The standard deviation for stock B is 6.12 %. (Round to two decimal places.)(Expected rate of return and risk) Syntex, Inc is considering an investment in one of two common stocks Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and retum? Common Stock A Probability 0.25 0,50 0:25 Common Stock B Return 10% 17% 10% Probability 0.10 0:40 0:40 010 (Click on the soon in order to copy its contents into a spreadsheet) Return -6% 8% 15% 20% COD a. Given the information in the table the expected rate of return for stock A is 15.5% (Round to two decimal places) The standard deviation of stock A is 4 36% (Round to two decimal places)(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Probability 0.35 0.30 0.35 Return 13% 14% 18% Common Stock B Return - 6% 7% 16% 20% Probability 0.15 0.35 0.35 0.15 (Click on the icon in order to copy its contents into a spreadsheet.)
- Suppose that index model for Stocks A and B is estimated from excess returns with the following results: Ra= 0.04+0.6Rm+ea, Rb= -0.04+1.3Rm+eb, Risk on the market is 30%, R-squared of A is 30%, R-squared of B is 40%, systematic risk for B is Select one: O a. 1521 O b. 1115 O c.914 O d. 1345QG. The following information is available about the stocks of two companies A and B: Stock A Stock B Expected Return (%) Probability -5 12 15 20 0.05 0.55 0.35 0.05 Expected Return (%) Probability 5 15 18 20 0.05 0.65 0.20 0.10 Stock Standard Deviation of Returns (%) A B 25 35 The coefficient of correlation between the returns on A and B is 0.05. A portfolio is constructed by allocating the funds between A and B in the ratio of 2:3. Calculate the expected return on the portfolio. b. Calculate the portfolio risk.Consider information given in the table below and answers the question asked thereafter: State Probability return on stock A Return on stock B A 0.15 10% 9% B 0.15 6% 15% C 0.10 20% 10% D 0.18 5% -8% E 0.12 -10% 20% F 0.30 8% 5% Calculate covariance and coefficient of correlation between the returns of thestocks A and B.v. Now suppose you have $100,000 to invest and you want to a hold a portfoliocomprising of $45,000 invested in stock A and remaining amount in stock B.Calculate risk and return of your portfolio.
- Consider information given in the table below and answers the question asked thereafter: State Probability return on stock A Return on stock B A 0.15 10% 9% B 0.15 6% 15% C 0.10 20% 10% D 0.18 5% -8% E 0.12 -10% 20% F 0.30 8% 5% i. Calculate expected return on each stock? On the basis of this measure, which stockyou will choose?ii. Calculate standard deviation of the returns on each stock? On the basis of thismeasure, which stock you will choose?iii. Calculate coefficient of variance of the returns on each stock? On the basis of thismeasure, which stock you will choose?Stocks A and B have the following probability distributions of expected future returns: profitability A B 0.1 11% 27% 0.2 3 0 0.4 12 20 0.2 24 28 0.1 36 43 Calculate the expected rate of return, , for Stock B ( = 12.70%.) Do not round intermediate calculations. Round your answer to two decimal places. % Calculate the standard deviation of expected returns, σA, for Stock A (σB = 18.54%.) Do not round intermediate calculations. Round your answer to two decimal places. % Now calculate the coefficient of variation for Stock B. Do not round intermediate calculations. Round your answer to two decimal places. Is it possible that most investors might regard Stock B as being less risky than Stock A? If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a portfolio sense. If Stock B is less highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be…(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Common Stock B Probability Return Probability Return0.20 10% 0.15 -4% 0.60 16% 0.35 7%0.20 21% 0.35 13% 0.15 20% a) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, what is the expected rate of return for stock A? What is the standard deviation? b. Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, what is the expected rate of return for stock B? What is the standard deviation? c. Based on the risk (as measured by the standard deviation) and return of each stock, which…
- (Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks. Given the information that follows, which investment is better, based on the risk (as measured by the standard deviation) and return? Common Stock A Probability 0.25 0,50 0.25 Probability 0.10 0.40 0.40 0.10 (Click on the icon in order to copy its contents into a apreadsheet) Common Stock B Return 10% 17% 18% Return -4% 7% 13% 20% G a. Given the information in the table, the expected rate of return for stock A is 15.5% (Round to two decimal places) The standard deviation of stock A is (Round to two decimal places.)(Expected rate of return and risk) Syntex, Inc. is considering an investment in one of two common stocks Given the information that filloors, which investment is better based on the risk (as measured by the standard deviation) and retum? Common Stock A Probability 0,20 0.60 0:20 Return 10% 17% 20% Common Stock B Probability 0.25 0.25 0.25 0.25 (Click on the icon in order to copy its contents into a spreadsheet) Return -6% 5% 16% 23% a. Given the information in the table, the expected rate of retum for stock Ais (Round to two decimal places)Compute the abnormal rates of return for the following stocks during period t (ignore differential systematic risk): Stock % % % % BFT % B F T UE Rit = return for stock i during period t Rmt = return for the aggregate market during period t Use a minus sign to enter negative values, if any. Round your answers to one decimal place. ARBE: ARF: ARTI: ARC: AREL: с Rit 11.5% 9.2 12.5 12.5 15.9 Rmt 4.7% 6.2 6.6 15.2 11.1