Fundamentals of Financial Management (MindTap Course List)
15th Edition
ISBN: 9781337395250
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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Question
Chapter 8, Problem 10Q
Summary Introduction
To discuss: The better performed stock
Introduction:
Sharpe ratio helps to determine the performance of the investment.
Expert Solution & Answer
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Students have asked these similar questions
Using the data in the following table,, estimate the:
a. Average return and volatility for each stock.
b. Covariance between the stocks.
c. Correlation between these two stocks.
a. Estimate the average return and volatility for each stock.
The average return of stock A is %. (Round to two decimal places.)
Data table
(Click on the following icon in order to copy its contents into a spreadsheet.)
Year
2010
2011
20%
2013
- 1%
- 13%
Stock A
Stock B
20%
12%
- 9%
Print
2012
8%
9%
C
Done
2014
4%
- 9%
2015
11%
27%
- X
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio,
we have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year.
Suppose we have the following information on a particular company.
Year 1
$ 62.18
40.30
2.35
a. High target price
b. Low target price
Year 2
$67.29
43.18
2.58
Year 3-
$74.18
39.27
2.73
Year 4
$78.27
46.21
High price
Low price
EPS
Earnings are expected to grow at 9 percent over the next year.
6. What is the high target stock price in one year?
32.16.
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g..
b. What is the low target stock price in one year?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
2.890
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single
benchmark PE ratio, we have a high and low PE ratio for each year. We can use these ratios to calculate a high and a
low stock price for the next year. Suppose we have the following information on a particular company:
High price
Low price
EPS
Year 1
$ 62.18
40.30
2.35
a. High target price
b. Low target price
Year 2
$ 67.29
43.18
2.58
Year 3
$74.18
39.27
2.73
Year 4
$ 78.27
46.21
2.89
Earnings are expected to grow at 9 percent over the next year.
a. What is the high target stock price in one year?
Note: Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
b. What is the low target stock price in one year?
Note: Do not round Intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Chapter 8 Solutions
Fundamentals of Financial Management (MindTap Course List)
Ch. 8 - Prob. 1QCh. 8 - Prob. 2QCh. 8 - Prob. 3QCh. 8 - Is it possible to construct a portfolio of...Ch. 8 - Stock A has an expected return of 7%, a standard...Ch. 8 - A stock had a 12% return last year, a year when...Ch. 8 - If investors aversion to risk increased, would the...Ch. 8 - Prob. 8QCh. 8 - In Chapter 7, we saw that if the market interest...Ch. 8 - Prob. 10Q
Ch. 8 - Prob. 11QCh. 8 - EXPECTED RETURN A stocks returns have the...Ch. 8 - PORTFOLIO BETA An individual has 20,000 invested...Ch. 8 - REQUIRED RATE OF RETURN Assume that the risk-free...Ch. 8 - Prob. 4PCh. 8 - BETA AND REQUIRED RATE OF RETURN A stock has a...Ch. 8 - EXPECTED RETURNS Stocks A and B have the following...Ch. 8 - Prob. 7PCh. 8 - BETA COEFFICIENT Given the following; information,...Ch. 8 - REQUIRED RATE OF RETURN Stock R has a beta of 2.0,...Ch. 8 - Prob. 10PCh. 8 - CAPM AND REQUIRED RETURN Calculate the required...Ch. 8 - REQUIRED RATE OF RETURN Suppose rRF = 4%, rM =...Ch. 8 - CAPM, PORTFOLIO RISK, AND RETURN Consider the...Ch. 8 - PORTFOLIO BETA Suppose you held a diversified...Ch. 8 - CAPM AND REQUIRED RETURN HR Industries (HRI) has a...Ch. 8 - Prob. 16PCh. 8 - Prob. 17PCh. 8 - EXPECTED RETURNS Suppose you won the lottery and...Ch. 8 - EVALUATING RISK AND RETURN Stock X has a 10%...Ch. 8 - REALIZED RATES OF RETURN Stocks A and B have the...Ch. 8 - SECURITY MARKET LINE You plan to invest in the...Ch. 8 - Prob. 22SPCh. 8 - Prob. 23ICCh. 8 - Prob. 1TCLCh. 8 - Prob. 2TCLCh. 8 - Prob. 3TCLCh. 8 - Using Past Information to Estimate Required...Ch. 8 - Prob. 5TCLCh. 8 - Prob. 6TCLCh. 8 - Prob. 7TCLCh. 8 - Prob. 8TCL
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