Calculate the required return on fisher corps stock

Assignment Help Financial Management

Reference no: EM131909676

1.There are three new securities available in the market with four probable states of the economy. The following table shows the returns on these securities under each of the probable states and the probabilities for each state.

State of Economy	Probability	Security 1	Security 2	Security 3
Mild Recession	10.0%	20.00%	2.00%	-8.00%
Low Growth	40.0%	12.00%	5.00%	4.00%
Moderate Growth	40.0%	6.00%	10.00%	12.00%
Rapid Growth	10.0%	-4.00%	15.00%	22.00%

1. Given the probabilities for the four possible economic conditions, calculate the expected returns for security 1 (Enter your answer as a percentage, not in decimal form. E.g. 15% should be entered as 15.00 and not as 0.15)

2. Given the probabilities for the four possible economic conditions, calculate the expected returns for security 2 (Enter your answer as a percentage, not in decimal form. E.g. 15% should be entered as 15.00 and not as 0.15)

3. Given the probabilities for the four possible economic conditions, calculate the expected returns for security 3 (Enter your answer as a percentage, not in decimal form. E.g. 15% should be entered as 15.00 and not as 0.15)

2. Fisher Corp has a beta value of 0.5. If the risk free rate is 2.5% and the Market Risk Premium is 11.0%, what is the Expected/Required return on Fisher Corp's stock? Using the Capital Asset Pricing Model, calculate the expected / required rate of return. (Enter your answer as a percentage, not in decimal form. E.g. 15% should be entered as 15.00 and not as 0.15)

Reference no: EM131909676

Questions Cloud

Delta of at money six month european call option : Calculate the delta of an at the money six month European call option on a non dividend paying stok when the risk free interrest rate is 10% per annum

What factors influence your decision to buy something new : What factors influence your decision to buy something new? Who is Victor Lebow, and what did he say in the 1950's that is so important to us today?

Examples of medieval art and architecture : What examples of medieval art and architecture best display this fusion of ideas and forms? Make certain your examples display the influence of all three

What equal or end-of-year amount must you save each year : You want to accumulate enough money over the next 10 years to pay for your son's college.

Calculate the required return on fisher corps stock : If the risk free rate is 2.5% and the Market Risk Premium is 11.0%, what is the Expected/Required return on Fisher Corp's stock?

What is the italized cost of project : This cycle then starts all over again and repeats forever ear. What is the italized cost of this project?

Develop a financial leverage chart illustrating the project : How much dollar return of the LTV 50% scenario comes from borrowed money and from equity investment?

Discuss very clear identification of one behavioral variable : Discuss Very clear identification of at least one behavioral variable contributing to morbidity and/or mortality associated with the health behavior

Find the value of the canadian dollar in euros : Assume the Canadian dollar is equal to $.75 and the U.S. Dollar is equal to 1.35 Euro. What is the value of the Canadian dollar in Euros?

User Account

All Pages