Expected rate of return on this stock

Assignment Help Financial Management

Reference no: EM13947200

You recently purchased a stock that is expected to earn 24 percent in a booming economy, 13 percent in a normal economy, and lose 2 percent in a recessionary economy. There is a 24 percent probability of a boom, a 61 percent chance of a normal economy, and a 15 percent chance of a recession. What is your expected rate of return on this stock?

2.86 percent

13.39 percent

12.33 percent

6.70 percent

11.67 percent

Reference no: EM13947200

Questions Cloud

What is the firms weighted average cost of capital : Tracy Morgan Productions has 80,000 bonds outstanding that are selling at par. Bonds with similar characteristics are yielding 6.75 percent. The company also has 750,000 shares of 7 percent preferred stock and 2.5 million shares of common stock outst..

What is the amount of cash flow from assets : W Mart has sales of $601,506, COGS and SG&A totaling $212,765, depreciation expense of $122,525, and taxes paid of $80,400. What is the amount of W Mart's cash flow from assets?

Identify the coverage that fills in coverage gap that arises : Identify the coverage that fills in the coverage gap that arises when the negligent party meets the financial responsibility law of the state, but the auto accident victim has losses in excess of the negligent driver’s liability limit. In a populatio..

What percentage of the firms common stock : Mr. Goldston is Chief executive officer of Omega Airlines Inc. and owns 950,000 shares of stock. The company currently has 6 million shares of stock and convertible bonds with a face value of $ 40 million outstanding. The convertible bonds have a con..

Expected rate of return on this stock : You recently purchased a stock that is expected to earn 24 percent in a booming economy, 13 percent in a normal economy, and lose 2 percent in a recessionary economy. There is a 24 percent probability of a boom, a 61 percent chance of a normal econom..

Returns on crash-n-burn computer stock over past five year : You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 2 percent, -12 percent, 16 percent, 22 percent, and 18 percent. What is the variance of these returns?

Stock has returns-probability range : A stock has returns of 5 percent, 18 percent, −19 percent, and 18 percent for the past 4 years. Based on this information, what is the 95 percent probability range for any one given year?

Each month into a savings account paying interest at rate : The Pirerras are planning to go to Europe 4 years from now and have agreed to set aside $170/month for their trip. If they deposit this money at the end of each month into a savings account paying interest at the rate of 5%/year compounded monthly, h..

What bid price per stamp should you submit : Consider a project to supply 60,800,000 postage stamps to the U.S. Postal Service for the next 5 years. You have an idle parcel of land available that cost $760,000 five years ago; if the land were sold today, it would net you $912,000, aftertax. You..

User Account

All Pages