5 years of data, you estimate the arithmetic average return for a certain stock to be 5.5% and the geometric average return to be 4.6%. Using Blume's formula, what is your average forecasted return over a 5 year period?
Q: Opose a stock had an initial price of $74 per share, paid à dividend $1.65 share during the year,…
A: Rate of return is the profit earned above the investment and it is the sum of dividend yield and…
Q: 1. You make deposits of $10,000, $6,000, and $5,000 respectively at the end of years 1, 2, and 3 in…
A: How much your savings will be worth in three years=10000*(1+5%)^2+6000*(1+5%)^1+5000*(1+5%)^0=11025…
Q: Valuation of Preferred Stock Beart Inc. issued preferred stock with a par value of $100 and an…
A: Giventhe par value of stock is $100the annual dividend rate is 8%.
Q: Patrick Cantlay just purchased a home for $500,000. His mortgage is a 30-year mortgage, that…
A: Mortgage loans are secured loans in which a home is collateral and are paid in equal monthly…
Q: Kurt has 25/50/20 auto insurance coverage. One evening he lost control of his vehicle, hitting a…
A: Let us first determine what the given numbers mean.The first number is 25 and means that Kurt will…
Q: Your broker has developed a list of firms, their betas, and the return he expects the st over the…
A: Capital Asset Pricing Model (CAPM) is an alternative model to find out the cost of equity or the…
Q: Which of the below indifference curve correspond to the highest risk aversion?
A: An indifference curve is a graphical representation used in economics to show all the combinations…
Q: Select all that are true with respect to the theory of market efficiency. Group of answer choices If…
A: the given question is related to the theory of market efficiencyThe theory of market efficiency…
Q: A loan for 50,000 has level payments to be made at the end of each year for 10 years at an annual…
A: Loan Installment is that amount under which borrower will pay the equal amount at the end of each…
Q: If your required return is 13 percent, calculate the NPV today. (Do not round intermediate…
A: Net present value is employed to assess an investment's profitability. It is determined by deducting…
Q: On July 1, 2023, DDJ Limited issued bonds with a face value of $900,000 due in 20 years, paying…
A: Bonds are issued below the face value than this is dicount and this is due to the higher interest in…
Q: Ms. Jennie Smith owns a house in Ottawa. She purchased the house in 2002 for $122000. In June 2019,…
A: A capital gain refers to the profit generated when an individual or entity sells a capital asset for…
Q: Western Electric has 34,500 shares of common stock outstanding at a price per share of $84 and a…
A: Cost of capital is a factor considered while choosing an investment strategy and estimating the…
Q: Your client has a risk aversion of A=3 when applied to return on wealth over a 1 year horizon. She…
A: Here, Expected ReturnStandard DeviationRisk Premium of S&P 5008.00%20%Risk Premium of Hedge…
Q: ased on economists' forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for…
A: The liquidity premium theory refers to the fact that the issuing company of a security that does not…
Q: Randall Corporation plans to borrow $266,000 for one year at 12 percent from the Waco State Bank.…
A: Principal amount borrowed(P) = $266,000Interest rate = 12%HenceInterest amount(I) = $266,000 X 12% =…
Q: Assume that you are 30 years old today and that you are planning on retirement at age 65. Your…
A: The concept of time value of money will be used here. As per the concept of time value of money the…
Q: Ashley and Duncan just created their January 2019 income and expense statement. They spent their…
A: A savings plan is a structured financial strategy that individuals or households use to…
Q: shareholders approve a 3-for-1 stock split on January 1, 2020. Douglas McDonnell Dynamics General…
A: Stock split:Stock split is typically done to increase the liquidity and affordability of the stock,…
Q: January 1, 2020, Master Inc. leased new equipment to Kerr Company noncancelable lease, requiring…
A: Implicit rate is at which the present value of cash flow from the assets will make equal to the…
Q: loan of 1000 at a nominal rate of 12 percent convertible monthly is to be repaid by six monthly…
A: Loans are paid in equal payments and these payments carry the interest and loan payments.
Q: Linda and Rob open an online savings account that has a 1% annual interest rate, compounded monthly.…
A: Future value is an estimate of future cash flows that may be received at a future date, discounted…
Q: The duration (in years) of a $1000, 2-year, 5% coupon bond (interest paid annually) is _____ year(s)…
A: Duaration = WherePVC = present value of future cash flows from the bond discounted at market ratePVC…
Q: Scenario: Suppose Greenback Corporation, an Australian company, issued 10-year bonds with a maturity…
A: According to bartleby guidelines , if question involves multiple sub parts , then 1st sub 3 parts…
Q: A loan of $17,504 was repaid at the end of 16 months. What size repayment check (principal and…
A: When the borrower borrows a loan from the lender, he has to pay a rate of interest on the borrowed…
Q: Which of the below indifference curve correspond to the highest risk aversion?
A: An indifference curve is a graphical representation used in economics to show all the combinations…
Q: p defray the expected cost expense of a complete plant renovation in 20 years, a company deposits…
A: Sinking fund are fund created to make the provision for the future requirements of the company may…
Q: Consider the following information for an internal rate of return calculatoin. Projected cash flow…
A: The internal rate of return is the rate at which the NPV of the project is zero, which means no…
Q: You are going to value Lauryn's Doll Co. using the FCF model. After consulting various sources, you…
A: Free Cash Flow:It refers to the amount of money remaining for the firm after paying all the…
Q: Eaton Tool Company has fixed costs of $315,000, sells its units for $76, and has variable costs of…
A: Breakeven point (in units) = Contribution per unit = Selling price per unit - Variable cost per…
Q: $1,200 is deposited every six months in an account that earns 2% compounded semi-annually, how many…
A: Effective interest rate is interest rate after considering impact of compounding and more is…
Q: US Robotics is evaluating a new product line. The CFO asks for an estimate of number of years to…
A: Payback period is the time period required to recover initial amount of investment in the projects.
Q: Find the present value of an annuity with annual payments of $1,100.00 compounded at the end of each…
A: Annual Payment = p = $1100Number of Payment = n = 8Time for first payment = t = 3Interest Rate = r =…
Q: Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be…
A: The final or the last cash flow of the project which includes the salvage value of the equipment is…
Q: Canary Company invested this year's profits of $73,800.00 in a fund that matured to $167,895.17 in 9…
A: Nominal interest rate is the non compounded interest rate without taking inflation into account for…
Q: Consider two bonds, a 3-year bond paying an annual coupon of 6.30% and a 10-year bond also with an…
A: The price of a bond is the present value of all the coupon payments and the face value at the yield…
Q: a-1. Project I Project II a-2. Project acceptance b-1. Project I Project II b-2. Project acceptance
A: Since the cash inflows are uniform value, we can determine the PV of cash inflow using the PV of…
Q: 7. A 300,000 loan is being paid off over 30 years with level payments at the end of each month. The…
A: Calculation of monthly interest rateWe have nominal interest rate - 8 % convertible…
Q: 5. Compute the yield to maturity of a discount bond selling for $15,000.00 with a face value of…
A: Yield to maturity,YTM refers to the rat of return that an investors expects to earn if bonds or…
Q: our broker has developed a list of firms, their betas, and the return he expects the stock to yield…
A: Capital Asset Pricing Model (CAPM) is an alternative model to find out the cost of equity or the…
Q: Steven Riley is borrowing $9,000 for 5 years at 8 percent. Payments are made on a monthly basis,…
A: Loan repayment refers to the process of returning borrowed funds, typically from a lender or…
Q: Over the duration of the loan, the total loan payment is... ... gradually increasing for…
A: Loans are paid by equal fixed payments that carry the interest and loan payments.
Q: Target Corporation (TGT) has $2.14 million in assets that are currently financed with 100% equity.…
A: Debt Equity ratio is that ratio which represent the relation ship between the debt and equity of the…
Q: A 4-year project is expected to generate annual sales of 30,000 units at a price of $50.00 per unit…
A: ParticularsCash flow @VC of $38Cash flow @VC of $39i) Units30,00030,000ii) SP per unit5050iii) VC…
Q: Chase Boyd plans to borrow $6,000 for 4 years. The loan will be repaid with a single payment after…
A: When the borrower borrows a loan from the lender, he has to pay a rate of interest on the borrowed…
Q: You've collected the following information from your favorite financial website. 52-Week Price Lo…
A: The required return on a stock can be calculated by
Q: b. The expected post-merger EPS in year 2020 for Graham's stockholders on each of their original…
A: (b)The expected post-merger EPS for Graham's stockholders on each of their original shares of…
Q: Required information [The following information applies to the questions displayed below.] A pension…
A: The Sharpe ratio calculates performance adjusted for risk by dividing the extra profit earned on a…
Q: When Marilyn Monroe died, ex-husband Joe DiMaggio vowed to place fresh flowers om her grave every…
A: The time value of money is the financial concept that is used in various financial analyses for…
Q: Bond value and time-Constant required returns Pecos Manufacturing has just issued a 15-year, 12%…
A: Bonds are debt instruments issued by companies. The company which issues bonds pays coupons or…
Using 25 years of data, you estimate the arithmetic average return for a certain stock to be 5.5% and the geometric average return to be 4.6%. Using Blume's formula, what is your average
Step by step
Solved in 3 steps with 1 images
- The following table reports the percentage of stocks in a portfolio for nine quarters: a. Construct a time series plot. What type of pattern exists in the data? b. Use trial and error to find a value of the exponential smoothing coefficient that results in a relatively small MSE. c. Using the exponential smoothing model you developed in part (b), what is the forecast of the percentage of stocks in a typical portfolio for the second quarter of year 3?The stock yields for three years are given as 0.15, -0.10 and 0.12, respectively. Which is the geometric mean return accordingly?Suppose the returns on a small stock are normally distributed. The historical average return is 18 percent, and the standard deviation is 6 percent. What is the probability that your return on this stock will be no less than 12 percent in a given year? What range of returns would you expect to see 95 percent of the time? What range would you expect to see 99 percent of the time?
- You invest in a stock for four years. The returns for the four years are 20%, -10%, 15%, and -5%. Calculate the arithmetic average return and the geometric average return.During the last four years, you owned two stocks that have had the following annual rates of return. Year KEX KW 2014 0.13 -0.08 2015 0.05 0.21 2016 0.07 0.06 2017 0.09 0.15 Compute the arithmetic mean annual return for EACH stock Compute the standard deviation of the annual rate of return for EACH stock Taking the results of (i) and (ii) into consideration, which stock is preferable? Why? Compute the geometric mean annual return for EACH stockDuring the past five years, you owned two stocks that had the following annual rates of return: Year Stock T Stock B 1 0.19 0.08 2 0.08 0.03 3 −0.12 −0.09 4 −0.03 0.02 5 0.15 0.04 Compute the arithmetic mean annual rate of return for each stock. Which stock is most desirable by this measure? Compute the standard deviation of the annual rate of return for each stock. (Use Chapter 1 Appendix if necessary.) By this measure, which is the preferable stock? Compute the coefficient of variation for each stock. (Use the Chapter 1 Appendix if necessary.) By this relative measure of risk, which stock is preferable? Compute the geometric mean rate of return for each stock. Discuss the difference between the arithmetic mean return and the geometric mean return for each…
- Based on five years of monthly data, you derive the following information forthe companies listed: Company SDi rm Padma 11.10% 0.82 Meghna 12.60% 0.63 Jamuna 6.60% 0.45 Karnafully 9.70% 0.70 SD on Market 7.60% 1.00 Assuming a risk-free rate of 9% and expected return for the market portfolio is 16 % compute the expected (required) return for all the stocks.Assume that you bought 200 stock B in your portfolio for total investment of $1200, now the market price of the stock is $75, the dividend paid for this stock is $2 each year. How much is the capital gain of this stock? Assume that the following data available for the portfolio, calculate the expected return, variance and standard deviation of the portfolio given stock A accounts for 45% and stock B accounts for 55% of your portfolio? A B Expected return 12.5% 18.5% Standard Deviation of return 15% 20% Correlation of coefficient (p) 0.4Suppose that your estimates of the possible one-year returns from investing in the common stock of the AYZ Corporation were as follows: Probability of occurrence 0.15 0.25 0.3 0.15 0.15 Possible return -10% 5% 20% 35% 50% What are the expected return? Calculate the standard deviation?
- You find a certain stock that had returns of 10 percent, −17 percent, 23 percent, and 15 percent for four of the last five years. The average return of the stock over this period was 10 percent. a. What was the stock’s return for the missing year? b. What is the standard deviation of the stock’s returns?The return pattern on your favorite stock has been 5.39%, 8.26%, -12.04%, and 14.27% over the last four years. What are the average arithmetic and geometric rates of return?You have been following a stock for 6 months and the following is its past return Year 1: -5% Year 2: -10% Year 3: 15% Year 4: 5% Year 5: 10% Year 6: 15% What is the expected return and standard deviation of the stock based on the historical data? Assume normal distribution, what is VaR at 5% for this stock? What is the Sharpe ratio of the stock based on historical data, risk free rate is 1%?
