Certain stock has an annual volatility

Assignment Help Financial Management
Reference no: EM131527638

Suppose that a certain stock has an annual volatility of 20%.

Consider the following statement: If the returns are not correlated over time and I hold the sotock for two years, the volatility of my return will be approximately 2 x 20% = 40%.

Do you agree or disagree with this statements? In at most 35 words, explain why.

Reference no: EM131527638

Questions Cloud

Find the implied bitcoin cross rate : Invert the quotes. Find the implied €/Bitcoin cross rate.
Forward exchange rate for dollar-yen : What is the approximate 180-day forward exchange rate for dollar-yen?
What is the interest rate differential : The one-year interest rate in Japan is -0.20% (.0020). What is the interest rate differential (iU.S. – iJapan)?
What is the one-year holding period return for this stock : What is the one-year holding period return for this stock?
Certain stock has an annual volatility : Suppose that a certain stock has an annual volatility of 20%.
Incorporated sponsors qualified plan that requires employees : RCM Incorporated sponsors a qualified plan that requires employees to meet one year of service to be 21 years old being considered eligible to enter the plan.
The cost of common equity and after-tax cost of debt : What is Crypton's cost of capital where the firm's tax rate is 30 percent? The after-tax cost of debt is. The cost of common equity is.
At what first cost is the project sensitive : At what first cost is the project sensitive if the cost of capital is maintained at 15%?
Define quantities of various classes of merchandise on hand : Which of the three methods of inventory costing-fifo, lifo, or average cost-will in general yield an inventory cost most nearly approximating current.

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the coefficient of variation for each project

Which project is least? risky, judging on the basis of range? Calculate the coefficient of variation for each project. Which project do you think? Greengage's owners should? choose?

  Stock price after recapitalization

Lee Manufacturing's value of operations is equal to $900 million after a recapitalization (the firm had no debt before the recap).

  Appreciated or devalued against the mark

Assume that a bank has assets located in London worth £150 million on which it earns an average of 8 percent per year. The bank has £100 million in liabilities on which it pays an average of 6 percent per year. The current spot exchange rate is £1..

  What must the liquidating dividend be

JJ Industries will pay a regular dividend of $0.65 per share for each of the next four years. At the end of four years, the company will also pay out a liquidating dividend. If the discount rate is 8 percent, and the current share price is $71, what ..

  What will be resulting percentage change in earnings share

what will be the resulting percentage change in earnings per share if they expect units produced and sold to change -2.4 percent?

  Decided not to replace the depreciated equipment

Two identical firms, A and B, have the same revenue of $10 million and equal variable and fixed costs for the current year. At the start of the year, they both owned $20,000,000 in equipment which follows a depreciation schedule of 5% per year.   Ove..

  What is intrinsic value of the stock today

The stock s required rate of return is 11%. What is intrinsic value of the stock today?

  Average amount of accounts payable net of discounts

What is the average amount of accounts payable net of discounts? what would be its average payable balance and what would be cost of this non-free trade credit.

  What is the required return for overall stock market

what is the required return for the overall stock market? what is the required rate of return on a stock with a beta of 0.8%.

  Show the firms net profit for the past year

Using accrual accounting and the preceding values, show the firm’s net profit for the past year.

  What is maximum price per share-newman should pay for grips

Newman manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just? completed, Grips earned ?$3.03 per share and paid cash dividends of ?$1.33 per share. What is the maximum price per share that Newman should pay for..

  Chance to buy an annuity

You have a chance to buy an annuity that pays $3,050 at the beginning of each year for 3 years. You could earn 5.5% on your money in other investments with equal risk. What is the most you should pay for the annuity?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd