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Name: StockExpected ReturnA15%B10%C22%D14% Use the information in the schedu
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Description: StockExpected ReturnA15%B10%C22%D14% Use the information in the schedule above to answer the following:(a). What is the expected return on a portfolio consisting of an equal amount invested in each stock (5 points)

Business

Finance

What is the expected return on a portfolio consisting of an equal amount invested in each stock

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 5PROB

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H5. A stock has had the following year-end prices and dividends: Year Price Dividend 1 $40 — 2 $55 $1.10 3 $60 $1.20 4 $70 $1.30 The geometric average return for the stock is ______%. Group of answer choices 23. 45 20 28. 35 22. 86 33 .41 Show proper step by step calculation and explain with details
Q2 - Returns on stocks X and Y are listed below: Period 1 2 3 4 5 6 7Stock X 4% -2% 5% -1% 10% 7% 12%Stock Y -3% 7% 4% 2% 2% 8% -3% Consider a portfolio of 10% stock X and 90% stock Y. What is the mean of portfolio returns? Please specify your answer in decimal terms and round your answer to the nearest thousandth (e.g., enter 12.3 percent as 0.123).
A3) Finance What is the expected standard deviation of stock A's returns based on the information presented in the table? Outcome Probability of outcome Stock A return in outcome : Good 16% 65.00% Medium 51% 17.00% Bad "?" -35.00%
Stock Expected Return A 15% B 10% C 22% D 14% Use the information in the schedule above to answer the following: What is the expected return on a portfolio consisting of an equal amount invested in each stock
Q2) Calculate Expected return and standard deviation of returns if the investor purchases the stock at $290 Event Probability Share Price Dividend A .10 330 4 B .15 320 3 C .30 300 3 D .20 290 4 E .25 280 4
A4 5c Consider the following information on three stocks in four possible future states of the economy: State of economy Probability of state of economy Stock A Stock B Stock C Boom 0.3 0.35 0.45 0.38 Good 0.3 0.15 0.20 0.12 Poor 0.3 0.05 –0.10 –0.05 Bust 0.1 0.00 –0.30 –0.10 stock A: State of economy Probability Rate of return Average (a) (b) (c) (d = b × c)(d = b × c) Boom 0.3 0.35 0.105 Good 0.3 0.15 0.045 Poor 0.3 0.05 0.015 Bust 0.1 0 0 Expected rate of return 0.165 stock B: State of economy Probability Rate of return Average (a) (b) (c) (d = b × c)(d = b × c) Boom 0.3 0.45 0.135 Good 0.3 0.2 0.06 Poor 0.3 -0.1 -0.03 Bust 0.1 -0.3 -0.03 Expected rate of return 0.135 Stock C: State of economy Probability Rate of return Average (a) (b) (c) (d = b × c)(d = b…
1. (a) What are the two components of most stocks’ expected total return?(b) How does one calculate the capital gains yield and the dividend yield of a stock?(c) If D1 = RM3.00, P0 = RM50, and the expected P at t=1 is equal to RM52, what are the stock’s expected dividend yield, capital gains yield, and total return for the coming year?2. (a) Are stock prices affected more by long-term or short-term performance? Explain.(b) A stock is expected to pay a dividend of RM2 at the end of the year. The required rate of return is rs = 12%. What would the stock’s price be if the growth rate were 4%?What would the stock’s price be if the growth rate were 0%?3. If D0 = RM4.00, rs = 9%, and g = 5% for a constant growth stock, what are the stock’s expected dividend yield and capital gains yield for the coming year?4. (a) Explain what is meant by the terms “horizon (terminal) date” and “horizon (terminal) value”.(b)Suppose D0 = RM5.00 and rs = 10%. The expected growth rate from Year 0 to Year 1 (g0…
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If Stock I is correctly priced right now, its Beta must be ______ . Round your answer to 2 decimal places (example: if your answer is 1.2357, you should enter 1.24). Margin of error for correct responses: +/- .02. expected return (implied by market price) Beta Stock I 12.4% ?? S&P500 11% T-bonds 4%
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An investor expects a14% return on a $ 50 stock that pays a dividend of $ 2.50. Was is the implied capital gain rate on the price appreciation?