Compute the market and stock reward-to-risk ratio

Assignment Help Financial Management

Reference no: EM132016035

1. The market risk premium for next period is 9.62% and the risk-free rate is 1.46% . Stock Z has a beta of 1.214 and an expected return of 10.17%.

Compute the following:

a) Market's reward-to-risk ratio :

b) Stock Z's reward-to-risk ratio :

2. An analyst gathered the following information for a stock and market parameters: stock beta = 1.490; expected return on the Market = 8.50%; expected return on T-bills = 1.20%; current stock Price = $7.64; expected stock price in one year = $11.85; expected dividend payment next year = $3.12. Calculate the "

a) Required return for this stock

b) Expected return for this stock

Reference no: EM132016035

Questions Cloud

Calculate the weighted average cost of capital for DSI : Calculate the weighted average cost of capital (WACC) for DSI. Under which circumstance can the WACC be used in investment appraisals

Find the change in the PV of the cash flows-the NPV : Find: The initial investment, the change in the PV of the cash flows, the NPV, and the IRR.

What is assent in contract and what invalidates : What is assent in a contract and what invalidates it?

Evaluated in the due diligence process : What are the critical areas that need to be evaluated in the due diligence process when evaluating whether to buy an existing business?

Compute the market and stock reward-to-risk ratio : Compute the Market's reward-to-risk ratio and Stock Z's reward-to-risk ratio.

Required return and expected return for stock : Calculate the required return and expected return for this stock.

Magnetic required rate of return : Magnetic’s required rate of return is 11.27% and they paid a $1.22 dividend today. Compute the following for Magnetic Corporation’s common stock:

Compute the magnetic corporation common stock : Magnetic’s required rate of return is 13.20% and they paid a $1.86 dividend today. Compute the following for Magnetic Corporation’s common stock:

Probability of average economy : There is a 40.52% probability of a below-average economy and a 59.48% probability of an average economy.

User Account

All Pages