a
Adequate information:
Beta for GDP factor
Beta for inflation factor
Beta for interest rates
Expected value for GDP factor
Expected value for inflation factor
Expected value for interest rates
Actual value for GDP factor
Actual value for inflation factor
Actual value for interest rates
To compute: Systematic risk of the stock return
Introduction: Systematic risk refers to the risk that affects the entire market, hence, these types of risk are non-diversifiable.
b
Adequate information:
Unsystematic return
Expected return on the stock
To compute: Total return on the stock
Introduction: Total return refers to the return actually made on the stock.
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Corporate Finance
- 1) what is the expected return rate for stock A 2) what is the expected return rate for stock B 3) what is the standard deviation of returns for stock A 4) what is the standard deviation of returns for stock B.arrow_forwardA stock’s return has the following distribution: Demand for the company’s products Probability of this demand occurring Rate of Return if this demand occurs Weak 0.1 (0.5) Below Average 0.2 (0.05) Average 0.4 0.16 Above Average 0.2 0.25 Strong 0.1 0.60 Use statistical measures to calculate the risk and return of the stock.arrow_forwardQ.Which of the following statements are true/false: I: The implied volatility of a stock can be calculated by deternining the standard deviation of stock returns over the last one year. II: The implied volatility of a stock can be calculated by deternining the standard deviation of stock returns over the last six months. A. I is true, II is false B. I is false, II is true C. I and II are both false D. I and II are both truearrow_forward
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