A company stock has a 50% chance of producing a 30% return, a 25% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firm's expected rate of return?
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- An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?A stock is trading at $80 per share. The stock is expected to have a yearend dividend of $4 per share (D1 = $4), and it is expected to grow at some constant rate, g, throughout time. The stock’s required rate of return is 14% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of gL?The stock of a given corporation has a 25% chance of producing a 16% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firms expected rate of return and standard deviation?
- Bloome Co.'s stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firm's expected rate of return?A firm has a required rate of return (k) of 15 percent and a return on equity (ROE) of 18%. If the plowback ratio is 40% what is the stock's P/E ratio?Everrest Inc.'s stock has a 44% chance of producing a 16.75% return, a 25% chance of producing a 25.00% return, and a 31% chance of producing a –4.25% return. What is the firm's expected rate of return?
- A company has a beta of .59. If the market return is expected to be 12.9 percent and the risk-free rate is 5.45 percent, what is the company's required return?Suppose the current risk -free rate of return is 5 percent and the expected market risk premium is 7 percent. Using this information, estimate the cost of retained earnings for a company with a beta coefficient equal to 2.0?ZR Corporation’s stock has a beta coefficient equal to 1.8 and a required rate of return equal to 16 percent. If the expected return on the market is 10 percent, what is the risk-free rate of return, rRF?
- If a firm has stock price of $52 and a required rate of return of 10% and earnings are expected to be $4 per share next year, then what is the firm’s PVGO?A manager believes his firm will earn a 14 percent return next year. His firm has a beta of 1.5, the expected return on the market is 12 percent, and the risk-free rate is 4 percent. Compute the return the firm should earn given its level of risk.What is the expected return on a stock if the firm will earn 24% during a period of economic boom, 14% during normal economic periods, and 2% during a period of recession if the probabilities of these economic environment are 20%, 65% and 15%, respectively?
