Estimate the expected return on dell stock

Assignment Help Finance Basics

Reference no: EM132041458

Question: You have the following information for Dell Inc.: 5%, 15%, -10%, 25%.

1. Calculate the average return and standard deviation for a population for Claymore.

2. The S&P 500 market portfolio has a standard deviation of 20%.Claymore Inc. has a beta of .57.Find the correlation between Claymore and the S&P 500.HINT: The formula for beta can help you get the correlation.

3. The S&P market portfolio has a return of 15%.Ten-year T-bonds (risk-free asset) have a return of 2.5%.Use Claymore's beta of .57 to estimate the required return for the stock.

4. If you put $120,000 into Claymore and $40,000 into the S&P 500, find the return and standard deviation of your portfolio.

5. You estimate the expected return on Dell's stock at 16%. If the market is efficient, what will happen to the price of Dell? Explain.

6. Dell announces a new project. The new project has a beta of 1.5 and an expected return (IRR) of 20%. Is the project a good idea? Explain.

Reference no: EM132041458

Questions Cloud

Assumptions of the simple CAPM model : Which of the following are assumptions of the simple CAPM model?

How much would the investment be worth : Downtown Medical Center is starting an endowment fund to pay for the expenses of a community outreach pediatric program. The expenses are $800,000 per year.

Did the irish play a role in the american revolution : Did the Irish play a role in the American Revolution? What role did African Americans play in the American revolution?

What sports were played during the american revolution : What were the roles of women before during and after the American Revolution? What sports were played during the American revolution?

Estimate the expected return on dell stock : You estimate the expected return on Dell's stock at 16%. If the market is efficient, what will happen to the price of Dell? Explain.

Evaluating the fiscal strength of health care organizations : Discuss the financial and nonfinancial measures that are important in evaluating the fiscal strength of health care organizations.

How many colonists were indentured or limited : Were colonists willing participants? Were people able to leave after they arrived? How many colonists were indentured or limited?

Compute the initial cost of machinery and equipment : Plato Pharmaceuticals Ltd. has invested $100,000 to date in developing a new type of insect repellent. The repellent is now ready for production and sale.

By how much would the firm increase its internal growth rate : By how much would the firm increase its internal growth rate if it reduced its payout ratio to zero?

User Account

All Pages