Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 2%, and IR 2.0%. A stock with a beta of 0.9 on IP and 0.4 on IR currently is expected to provide a rate of return of 6%. If industrial production actually grows by 4%, while the inflation rate turns out to be 4.0%, what is your revised estimate of the expected rate of return on the stock? (Do not round intermediate calculations. Round your answer to 1 decimal place.) Revised expected rate of return
Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 2%, and IR 2.0%. A stock with a beta of 0.9 on IP and 0.4 on IR currently is expected to provide a rate of return of 6%. If industrial production actually grows by 4%, while the inflation rate turns out to be 4.0%, what is your revised estimate of the expected rate of return on the stock? (Do not round intermediate calculations. Round your answer to 1 decimal place.) Revised expected rate of return
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate,
IR. IP is expected to be 2%, and IR 2.0%. A stock with a beta of 0.9 on IP and 0.4 on IR currently is expected to provide a rate of return
of 6%. If industrial production actually grows by 4%, while the inflation rate turns out to be 4.0%, what is your revised estimate of the
expected rate of return on the stock? (Do not round intermediate calculations. Round your answer to 1 decimal place.)
Revised expected rate of totum i
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