Assuming the stock returns follow normal distribution

Assignment Help Financial Management

Reference no: EM131309718

1. A stock had an average annual rate of 8% with standard deviation of 6%. Based on these returns, what is the probability that this stock will earn at least 20% in anyone given year assuming the stock returns follow normal distribution?

a. 2.5

b. 5%

c. 10%

d. 95%

2. Which of the following comes closest to the present value of receiving $100 in 9 months if the interest rate is 4%?

A. $99.26

B. $98.53

C. $97.81

D. $97.10

E. $99.53

Reference no: EM131309718

Questions Cloud

Determine the difference in the present worth values : Determine the difference in the present worth values of the following two commodity contracts at an interest rate of 8% per year. Contract 1 has a cost of $10,000 in year 1; costs will escalate at a rate of 4% per year for 10 years. Contract 2 has th..

Lower asset turnover ratios are generally indicative : Lower asset turnover ratios are generally indicative of more efficient asset management. Borrowing money causes a corporation's return on net assets to increase because everything else being equal the higher the leverage, the higher return on net ass..

Assuming continue to hold stock-what is after-tax return : With your newfound expertise you purchase 100 shares of KSU Corporation for ?$35.29 per share. Over the next 12 months assume the price goes up to $ 43.26 per? share, and you receive a qualified dividend of ?$0.52 per share. Assuming you continue to ..

Evaluate relevant market averages and indexes : Gather and evaluate relevant market averages and indexes over the past 6 months to assess recent stock and bond market conditions. Describe the conditions in each of these markets. Using recent history, coupled with relevant economic and current even..

Assuming the stock returns follow normal distribution : A stock had an average annual rate of 8% with standard deviation of 6%. Based on these returns, what is the probability that this stock will earn at least 20% in anyone given year assuming the stock returns follow normal distribution? Which of the fo..

Values of mean return and variance for the stock fund : Consider the following table: Stock Fund Bond Fund Scenario Probability Rate of Return Rate of Return Severe recession 0.20 −38% −12% Mild recession 0.20 −26% 7% Normal growth 0.35 8% 3% Boom 0.25 46% 7% a. Calculate the values of mean return and var..

Annual earnings of the company without new investment : XYZ Inc. has 1.5 million shares outstanding. The company currently pays out all its earnings as dividends and just paid a dividend of $6 per share. Its annual earnings are expected to be in perpetuity. It is considering a new project that requires re..

What is best estimate of the current stock price : The XYZ Company paid $1.85 dividend yesterday. Its dividend growth rate is expected to be constant at 22.30% for 2 years, after which dividends are expected to grow at a rate of 5.80% forever. Its required return (rs) is 13.05%. What is the best esti..

Money should the value of the franc decrease : You are an arbitrageur in London. Swiss francs are currently selling in London for U.S. $0.67. You anticipate they will be selling for U.S. $0.70 in 30 days. You purchase $1 million worth of francs on the spot market. In a 2-3 page paper examine what..

User Account

All Pages