Q: Suppose rRF = 9%, ľM = 14% and b; = 13 What is r;, the required rate of return on Stock i?
A: Given: Risk free return (rRF)=9%Market returnrM=14%Beta coefficient(bi)=13
Q: If the volatility of a stock is .33, find the standard deviation of: (see the attachment for the…
A: Recall the Black Scholes model derivation.Log of the stock price is normally distributed.The…
Q: tion - Name the stock with the highest weightag
A: Nifty is stock market index of India which consists of 50 stocks of various difference sector.
Q: What is the (annualized) mean return for each stock and the market i. Arithmetic ii. geometric
A: Given: Date YUM ZTS AAPL Market 31/01/18 84.59 76.73 87.3 1251.42 28/02/18 81.38 80.86 75.74…
Q: You are evaluating two stocks and trying to decide if they are underv You are given the following…
A: Alpha of stock shows that how is the performance of stock based on the risk involved in the stock so…
Q: The dividend yield (i.e. D1/P0) is a good measure of the expected return on a common stock under…
A: The percentage dividend yield is a financial proportion (dividend/price), indicating how often a…
Q: What is the standard deviation of Stock A returns given the information below about its returns…
A: Solution:- Standard deviation means the deviation of a value around its mean. Standard deviation in…
Q: n the formula ke >= (D1/P0) + g, what does (D1/P0) represent? Select one: a. The expected…
A: ke = Required return D1=Expected dividend P0=Current price g = Growth rate
Q: The table below contains the covariance matrix of stock returns and the market. Assume that the…
A: Risk is the possibility of loss for an organization and risk management is one of the most important…
Q: What is the expected return on this portfolio? # of Expected Return Stock Price/Share Shares A 11%…
A: Given information: Expected return on stocks A, B and C are 11%, 6% and 17% Number of shares of A, B…
Q: Which of the statements is NOT TRUE about the yield of a stock? a) It is comprised of dividend yield…
A: Capital Gain/Loss: It refers to the change in the value of an investment made by an individual or an…
Q: What is a stock’s volatility?
A: Stock Volatility: Volatility is defined as a statistical measure of the dispersion of the returns…
Q: 0.6 52
A: Risk per unit return of stock is calculated by using a metric coefficient of variation Risk adjusted…
Q: Define required rate of return on stock
A: Answer: Usually, return is a benefit received on investment. This covers any change in stock…
Q: A stock's next expected dividend divided by the current stock price is the: O current yield O total…
A: A stock's price is decided by the dividend it pays, the dividend growth rate and the required rate…
Q: What is the required return for the overall stock market? Round your answer to two decimal p % What…
A: Beta signifies how the systematic risk and the expected return of an investment are related to each…
Q: Is the following equation correct for finding the value of a constant growth stock? Explain.
A: Price of stock can be found from the constant growth model of dividend discount method.
Q: Drawing Examples ven the following information, what is e standard deviation of the returns on is…
A: In this first we have to calculate mean return and deviations from mean and from that.
Q: Calculate the expected return for Stock A.
A: Expected Return: It represents the profit or loss expected by an investor on an investment. It is…
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: State Dep Rec Prob 0.1 0.3 Return 0.04 0.18
A: The expected return is the weighted probabilistic rate of return that is realized on stock…
Q: How do you find the market risk premium and market expected return given the expected return of…
A: The rate of return earned by the investor over the risk-free rate of return is considered as market…
Q: Stock A Stock B Market Standard Deviation Return Correlation Coefficient between A & M Correlation…
A: The Capital Asset Pricing Model(CAPM) refers to the relationship between expected return for assets…
Q: A reasonably good model for stock prices / asset values dS = µSdt+oSdz or ds S where is the expected…
A: GBM ( Geometric Brownian Motion) : It is a continuous-time stochastic process in which the logarithm…
Q: The correlation between the returns on the stock of Firm ABC and those on the market portfolio is -…
A: A risk is a probability of unfavorable outcome. All investments are subjected to risks. And all such…
Q: Describe the effect of a change in each of the following factorson the value of a call option: (1)…
A: An agreement where the holder has a right to purchase or sell the shares at a specific price at a…
Q: (a) Calculate the cost of common equity (stock). (b) Calculate the…
A: a) Last dividend paid (D0) = $0.80 Growth rate (g) = 7% Current price (P0) = $9.50 Floatation cost…
Q: estimate a current per share price of the stock.
A: The constant growth model is a method for valuing the share price of a stock. It calculates the…
Q: estion 1 If an investor holds only stocks in Tencent, the relevant measure of risk will be…
A: When you hold stock than have risk of holding the stock and this risk can be measured by many ways.
Q: Suppose that the index model for stocks A and Bis estimated from excess returns with the following…
A: Covariance shows the relationship of two variables whenever there is a change in one variable.…
Q: Suppose you have predicted the following returns for stock C in three possible states of nature.…
A: The expected rate of return is the weighted return that an investor receives based on the various…
Q: Which of the following will (holding everything else constant) cause the price earnings (P/E) ratio…
A: The price to earning ratio is the ratio of current market price with respect to the earning per…
Q: A stock's risk premium is equal to the: expected market risk premium times beta. expected market…
A: In the given question we are given four options regarding stock's risk premium and we need to select…
Q: Let's explore the difference between "expected" and "actual" return of a stock. 1) How might we…
A: 1) The expected return (also known as the "expected rate of return") is the profit or loss that can…
Q: The rate of net investment is 50t /3 and capital stock at t 0 is 100. Find the capital stock…
A: Given:Rate of net investment is:I= 50t23Capital stock (K0) at t =0 is 100To compute:Capital Stock…
Q: The stock of FDLis: Oa the total accum Ob the flow of FDI Oc the amount of the flow of FDI
A: So, correct option is a.
Q: Give the return of the stock in which you would most likely invest and show the preferred order of…
A: Capital asset pricing model is used to determine the expected return from an individual security for…
Q: A stock has an Expected return (Rj) = 10.2%, risk-free rate (RF) = 4.5%, market risk premium = 8.5%.…
A: To calculate the beta of stock we will use the below formula Beta = (Expected return-Risk free…
Q: 3. Which of the following is known as current stock yield? A. Market Value B. Par Value C. Stock…
A: The current yield is an investment's annual income (interest or dividends) divided by the current…
Q: How do you calculate conditional volatility of a stock returns?
A: Volatility represents how large an asset's price swing around the mean price i.e the statistical…
Q: Define required rate of return on Stock i
A: Stock refers to the security that represents the ownership of the stockholders in the company. The…
Q: The following expression can be used to find the value of a constant growth stock. P0 = D0 / Ks + g
A: Stock is one of a company's securities which is issued by the company to arrange the funds. Value of…
The return of stock B is __%
The volatility of stock A is __%
The volatility of stock B is __%
Step by step
Solved in 5 steps with 2 images
- Directions: Compute the total returns, the average of returns, and the standard deviation of the following stocks: 2) 1) EGRH Inc. DMP, Ltd. AVERAGE OF RETURNS (XI-X)² (x) YEAR AVERAGE OF RETS STOCK RETURN RICE YEA (x₁) Jan-2021 P8.30 Feb-2021 P8.60 Jan-2021 P0.088 Feb-2021 P0.090 Mar-2021 P0.097 Apr-2021 PO.189 May-2021 PO.164 Mar-2021 P9.14 Apr-2021 P13.30 May-2021 P13 Jun-2021 P0.495 Jun-2021 P 0 Jul-2021 PO.280 Jul-2021 6.94 Aug-2021 P0.455 Aug-202 P13.70 Sep-2021 P0.390 Sep-2 P14.88 Oct-2021 P0.375 0 21 P15.30 Nov-2021 PO.325 -2021 P14.30 Dec-2021 P0.330 Dec-2021 P15.52 SD (8) = 3) STOCK RETURN PRICE (x₁) GSM Inc. YEAR Jan-2021 P57.70 Feb-2021 P52.90 Mar-2021 P50.95 Apr-2021 P58.2 May-2021 P7 05 Jun-2021 34.75 Jul-2021 P85.00 Aug-20 P105.00 Sep-21 P114.00 O 2021 P101.00 N-2021 P100.40 Dec-2021 P113.80 SD (8) = STOCK RETURN CE (x₁) AVERAGE OF RETINS ²) (x₁-x)² SD (8) = ACEE, Inc. YEA Jan-2021 P156 Feb-2021 P20.80 Mar-2021 P22.50 Apr-2021 P18.90 May-2021 P17 Jun-2021 P76 Jul-2021…Directions: Compute the returns, average of returns and standard deviation of the following stocks and the PSEI. 1. 2. AGI SM Year Stock Return x x (x--x)² Year Stock Return x x (x-x)² Price Price 30/1/2014 27.100 30/1/2014 704.500 28/2/2014 30.000 28/2/2014 694.000 31/3/2014 28.500 31/3/2014 705.000 30/4/2014 31.150 30/4/2014 725.000 30/5/2014 29.650 30/5/2014 786.000 30/6/2014 29.100 30/6/2014 816.000 31/7/2014 26.350 31/7/2014 797.000 29/8/2014 24.600 29/8/2014 772.000 30/9/2014 26.000 30/9/2014 803.500 31/10/2014 25.300 31/10/2014 783.500 28/11/2014 24.800 28/11/2014 804.500 29/12/2014 22.550 29/12/2014 815.000 PSEI Year Stock Return x X (x-X)? 30/6/2014 6,844.31 Price 31/7/2014 6,864.82 30/1/2014 6,041.19 29/8/2014 7,050.89 3. 28/2/2014 6,424.99 30/9/2014 7,283.07 31/10/2014 7,215.73 31/3/2014 6,428.71 28/11/2014 7,294.38 30/4/2014 6,707.91 29/12/2014 7,230.57 30/5/2014 6,647.65Directions: Compute the total returns, the average of returns, and the standard deviation of the following stocks: 1) 2) EGRH Inc. MP, Ltd. STOCK RETURN AVERAGE OF YEA AVERAGE OF RETURNS (x) YEAR STOCK RETURN PRICE (x₁) PRICE RETU Jan-2021 Po Feb-2021 P8.6 Jan-2021 PO. Feb-2021 PO.090 Mar-2021 P0.097 Apr-2021 PO.189 May-2021 PO.164 Mar-2021 P9.14 Apr-2021 P13.30 May-2021 P13 Jun-2021 P60 Jul-2021 16.94 Jun-2021 P0.495 Jul-2021 PO.28 Aug-2021 PO Sep-2021 90 Aug-202 P13.70 Sep-2 P14.88 Oct-2021 0.375 Oct 21 P15.30 Nov-20 PO.325 N2021 P14.30 Dec-2 PO.330 ec-2021 P15.52 3) SD (8) GSM Inc. STOCK YEAR PRICE Jan-2021 P57.70 Feb-2021 P52.90 Mar-2021 P50.95 Apr-2021 P58.25 May-2021 P74.05 Jun-2021 P94.75 Jul-2021 P85.00 Aug-2021 P105.00 Sep-2021 P114.00 Oct-2021 | P101.00 Nov-2021 P100.40 Dec-2021 P113.80 SD (8) = RETURN (x₁) -x)² AVERAGE OF RETURNS (x-x)² (x) SD (8) = ACEE, Inc. YEAR STOCK RETURN PRICE (x₁) Jan-2021 P13.56 Feb-2021 P20.80 Mar-2021 P22.50 Apr-2021 P18.90 May-2021 P17.00…
- Based on the following information: State of Economy Probability of State of Economy Return on Stock J Return on Stock K Bear .20 -.030.024 Normal .55.128.052 Bull .25 .208.082 a. Calculate the expected return for each of the stocks. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the standard deviation for each of the stocks. ( Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g , 32.16.) c. What is the covariance between the returns of the two stocks? (Do not round intermediate calculations and round your answer to 6 decimal places, e.g., .161616.) d. What is the correlation between the returns of the two stocks? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.)You've collected the following information from your favorite financial website. 52-Week Price Div Yld PE Close Net Ratio Price Chg Hi Lo Stock (Div) % 77.40 10.43 Palm Coal .36 2.6 6 13.90 .24 55.81 33.42 Lake Lead Grp 1.54 3.8 10 40.43 -.01 130.93 69.50 SIR 2.00 2.2 10 88.97 3.07 50.24 13.95 DR Dime .80 5.2 6 15.43 -.26 .18 35.30 20.77 Candy Galore 0.35 1.5 28 ?? a. Using the dividend yield, calculate the closing price for Candy Galore on this day. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Assume the actual closing price for Candy Galore was $23.02. Your research projects a 4.75 percent dividend growth rate for Candy Galore. What is the required return for the stock using the dividend discount model and the actual stock price? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Stock price b. Required return %Using the stock table for Dell Technologies below, calculate the earnings per share. Round your answer to the nearest cent.Do not include the $ in your answer.Dell TechnologiesDVMT$66.26$66.40-$66.96$42.02-568.25NameSymbolCloseDay Range52-Week RangeVolumeP/EDividendDividend YieldEPS895,028103.53$0.000%?
- You are given the following information concerning a stock and the market Year 2017 2018 2019 2020 2021 2022 Returns Market 18% 11 12 -14 37 15 Correlation Beta a. Calculate the average return and standard deviation for the market and the stock. Note: Use Excel to complete the problem. Enter your answers as a percent rounded to 2 decimal places. Average return Standard deviation Stock 34% 27 3 -21 16 22 Market % Stock % % b. Calculate the correlation between the stock and the market, as well as the stock's beta. Note: Use Excel to complete the problem. Round your correlation answer to 2 decimal places and beta answer to 4 decimal places.You've collected the following information from your favorite financial website. 52-Week Price Div PE Close Net Hi Lo Stock (Div) Yld % Ratio Price Chg 77.40 10.43 Palm Coal 0.36 2.6 6 13.90 -0.24 Lake Lead Grp 55.81 33.42 3.8 10 40.43 -0.01 1.54 131.04 70.05 SIR 2.55 2.9 10 89.08 3.07 50.24 13.95 DR Dime 0.80 5.2 6 15.43 -0.26 Candy Galore 35.00 20.74 1.5 28 ?? 0.18 0.32 According to your research, the growth rate in dividends for SIR for the next five years is expected to be 21 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.75 percent indefinitely. Assume investors require a return of 14 percent on SIR stock. (Hint: the number after the company's name above is DO.) Requirement 1: According to the dividend growth model, what should the stock price be today? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Current stock priceAstromet is financed entirely by common stock and has a beta of 1.20. The firm pays no taxes. The stock has a price-earnings multiple of 11.0 and is priced to offer a 10.9% expected return. The company decides to repurchase half the common stock and substitute an equal value of debt. Assume that the debt yields a risk-free 4.6%. Calculate the following: Required: a. The beta of the common stock after the refinancing b. The required return and risk premium on the common stock before the refinancing c. The required return and risk premium on the common stock after the refinancing d. The required return on the debt e. The required return on the company (i.e, stock and debt combined) after the refinancing If EBIT remains constant: f. What is the percentage increase in earnings per share after the refinancing? g-1. What is the new price-earnings multiple? g-2. Has anything happened to the stock price? Complete this question by entering your answers in the tabs below. Reg A to E Reg F to G2…
- You've collected the following information from your favorite financial website. (The number next to the stock name is DO.) 52-Week Price Div Yld % PE Close Net Hi Stock (Div) Palm Coal 0.36 Lake Lead Grp 1.54 SIR 2.55 Ratio Price Chg -0.24 Lo 77.40 10.43 2.6 6. 13.90 55.81 33.42 3.8 10 40.43 -0.01 131.04 50.24 70.05 2.9 5.2 10 89.08 3.07 13.95 DR Dime 0.8O 6. 15.43 -0.26 Candy Galore 0.32 35.00 20.74 1.5 28 ?? 0.18 According to your research, the growth rate in dividends for SIR for the next five years is expected to be 21 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.75 percent indefinitely. Assume Investors require a return of 14 percent on SIR stock. According to your research, the growth rate in dividends for SIIR for the next five years is expected to be 21 percent. Suppose SIR meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.75 percent…Review the following market information: Current Stock Market Return 11.25% Current T-Bill Price $979.43 Historic T-Bill Average Return 2.80% Historic Stock Market Average Return 8.10% Stock Beta 1.23 What is the required return (rounded to two places)?You've collected the following information from your favorite financial website. 52-Week Price Div PE Close Net Hi Lo Yld % Ratio Price Chg Stock (Div) Palm Coal .36 77.40 10.43 2.6 6 13.90 -.24 Lake Lead Grp 56.26 33.87 4.9 10 40.88 -.01 130.93 69.50 SIR 2.00 2.2 10 88.97 3.07 50.24 13.95 DR Dime .80 5.2 6 15.43 -.26 35.00 20.74 Candy Galore .32 1.5 28 ?? .18 Find the quote for the Lake Lead Group. Assume that the dividend is constant. a. What was the highest dividend yield over the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What was the lowest dividend yield over the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Highest dividend yield % b. Lowest dividend yield % 1.99
