Let's explore the difference between "expected" and "actual" return of a stock. 1) How might we calculate what the expected return of a stock should be? 2) How might we calculate the "actual" return of a stock?

Q: Suppose we observe from market data that, for a given non-dividend paying stock, See Image What…

A: Forward price (F0) is the price of forward contract at which buyer and seller of the contract agreed…

Q: What are some advantages and disadvantages of stockrepurchases?

A: Answer: Stock repurchases is nothing but the allocation of profits by a corporation to owners by…

Q: A class of Efficient Market Hypothesis that implies all public information is calculated into a…

A: Efficient Market Hypothesis is the market theory which depicts that market is generally efficient…

Q: Common stock has par value, and market value. Explain briefly these values. Which one is most…

A: Par value of common stock : Par value corresponds to the equity valuation specified in the corporate…

Q: Define the terms covariance and correlationcoefficient. How are they related to one another,and how…

A: Covariance refers to the situation which tells about the association between two variables how they…

Q: Describe in your own words the characteristics of growth and value stocks.  Which type of stock is…

A: Stocks, usually referred to as shares or equities, are certificates of ownership in publicly traded…

Q: discuss what is the stock price?

A: >Stocks, when referred to in relation with the paid in capital of a corporation, refers to the…

Q: What stock valuation models are available?

A: The stock valuation models as follows: Absolute valuation: This method mostly emphases on finding…

Q: wo potential explanations for the observed stock price reaction around equity  carveout…

A: Equity carve out is a type of business reorganization. In this type of business reorganization, a…

Q: How does a stock price play a role in ROA or ROE

A: Return on Equity (ROE) is the ratio which defines the company’s efficiency to utilize investors…

Q: Can you help me with an explaination of how to reverse engineer a stock price please?

A: Reverse engineering allows analysts to remove the uncertainties. It is a discounted cash flow that…

Q: Why are the returns of sustainable stocks and traditional stocks different?

A: Stock returns are the returns that are generated in the stock market for investing in a stock.

Q: What are the main stock- and firm valuation methods and is there a relationship between the stock…

A: Value of the firm is the market value of the firm at its present market value of eah share.

Q: 4. How the Stock valuation is normally made? Cost or net realizable value whichever is more Cost and…

A: Stock valuation is the process of analyzing the intrinsic worth of the stock possessed by the entity…

Q: What is a stock’s volatility?

A: Stock Volatility:   Volatility is defined as a statistical measure of the dispersion of the returns…

Q: Assuming that the required rate of return is determined by the CAPM, explain how you would usethe…

A: Given: The required rate of return is determined by the CAPM and the dividend growth model to…

Q: Taking the Efficient Market Hypothesis into consideration, do you think we still need to study…

A: The efficient market hypothesis (EMH) explains the performance of the stock market as a reflection…

Q: now about common stock valuation if there is already an efficient market

A: Efficient market theory is theoretical concepts only and use in academics only.

Q: Explain how to find the value of a nonconstant growth stock

A: Introduction: Non-constant models of growth presume that the valuation can fluctuate over time. This…

Q: What are the steps involved in valuation of supernormal growth stock?

A: Supernormal growth stock is a stock which experiences a robust growth at initial levels and later…

Q: Explain realized rate of return on stock

A: Realized Rate of Return on stock gives you the percentage return on holding the stock for a certain…

Q: When all investors have the same information and care only about expected return and volatility; if…

A: The measure of the dispersion of return on stocks is known as volatility. High volatility means the…

Q: Return formula for common stock?

A: Applying capital asset pricing model (CAPM),

Q: Offer some reasons that the intrinsic value that you might calculate with the methodologies learned…

A: Intrinsic value of a stock can be calculated using different methods like DCF (discounted cash…

Q: How will you know if you think a certain stock will be more or less volatile in terms of price…

A: Investors have different options to make investments, and the motive behind investments is to…

Q: Explain stock market index, provide example and what is the importance?

A: Stock market or share market is an aggregation of purchasers and sellers of stocks and helps…

Q: how is price oc preffered stock gotten

A: The cost of preferred stock is determined by the dividend payment divided by the net proceeds per…

Q: Higher a stock’s volatility, why does the higher the probability of large increases or decreases in…

A: Stock Volatility:   Volatility is defined as a statistical measure of the dispersion of the returns…

Q: What role does sentiment play to explain stock price volatility? Explain

A: The role of emotion in determining the price of a company is one of the most significant aspects to…

Q: Define actual rate of return on stock

A: Actual rate of return on stock

Q: Explain how to find the value of a stock given itslast dividend, its expected growth rate, and…

A: A model that helps to evaluate the value of the stock with the assumption that the dividend will…

Q: Summarize the major factors affecting stock price?

A: Answer: Investment in stock market is uncertain, because stocks respond to various internal and…

Q: Explain which has a stronger effect on stock prices, the change in the interest rate or the…

A: Stock is one of the major securities issued by the companies and an important financial indicator…

Q: Do you think we still need to study common stock valuation, given the Efficient Market Hypothesis?…

A: Efficient Market Hypothesis represents the stock prices after considering all the information…

Q: hat could you comment on this statement?  "Caution is warranted when using PE ratio to value stocks

A: The cost-to-income proportion (P/E proportion) is the proportion for esteeming an organization…

Q: Explain the difference between expected rate of return, required rate of return, and historical rate…

A: Return Return is also referred to as the money lost or made over a specific period of time. It can…

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.