Expected return-what is risk premium for your portfolio

Assignment Help Financial Management
Reference no: EM131078013

You own a portfolio that has a total value of 103,000 dollars. The portfolio has 5,000 shares of stock A, which is priced at 8.3 dollars per share and has an expected return of 8.25 percent. The portfolio also has 20,000 shares of stock B, which has an expected return of 19.14 percent. The risk-free return is 3.51 percent and inflation is expected to be 1.64 percent. What is the risk premium for your portfolio?

Reference no: EM131078013

Questions Cloud

What is the expected return for middlefield motors stock : If the market premium is 6.78 percent, the risk-free rate is 4.68 percent, the inflation rate is 2.62 percent, and Middlefield Motors common stock has a beta of 1.19, then what is the expected return for Middlefield Motors stock?
What is the value of the option to expand : We are examining a new project. We expect to sell 8,000 units per year at $80 net cash flow a piece for the next 15 years. In other words, the annual operating cash flow is projected to be $80 × 8,000 = $640,000. Assume that success and failure are e..
Student loans at an interest rate : While you were a student in college, you borrowed $12,000 in student loans at an interest rate of 9 percent, compounded annually. If you repay $1,500 per year, how long, to the nearest year, will it take you to repay the loan? I need excel formula to..
Compute the effective cost of the loan : Quantum Inc., a U.S.-based corporation, borrows SF 2,000,000 from the Swiss bank, UBS. The entire principal is to be repaid at the end of the year, and the interest rate is 4% per annum to be paid at the end of the year in Swiss francs. Suppose that ..
Expected return-what is risk premium for your portfolio : You own a portfolio that has a total value of 103,000 dollars. The portfolio has 5,000 shares of stock A, which is priced at 8.3 dollars per share and has an expected return of 8.25 percent. What is the risk premium for your portfolio?
Leave the money in the account to accrue interest : You deposit $13346 at the end of each year, increasing the amount by $2539 each subsequent year, into an account paying 9% compounded annually for 14 years. You then stop making deposits and leave the money in the account to accrue interest. How much..
What is the value of stock today : Twister Cheese Corporation will pay a dividend of $2.00, $3.25, $4.00, and $3.00 during the next four years. You expect the stock price at the end of year four equal to $54. If the discount rate is 12%, what is the value of stock today?
Speculator seeking capital gain to purchase bonds : Under which circumstances is it best for a speculator seeking a capital gain to purchase bonds.
Present value of bond to exceed the par value of same bond : We can expect the present value of a bond to exceed the par value of the same bond when.

Reviews

Write a Review

Financial Management Questions & Answers

  What is maximum cost would be willing to pay for project

Nally, Inc., is considering a project that will result in initial aftertax cash savings of $6.9 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. What is the maximum cost Nally would be wi..

  Analysts predict that its earnings will grow

You are running a hot Internet company. Analysts predict that its earnings will grow at 30% per year for the next five years. After that, as competition increases, earnings growth is expected to slow to 2% per year and continue at that level forever...

  Calculate the estimated intrinsic value of the stock today

RT has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, RT is expected to experience a 15% annual growth rate for the next 5 years. Calculate the estimated intrinsic v..

  Demonstrated trends toward western-style consumption

China and India have demonstrated trends toward Western-style consumption over the last decade. Given the emphasis on the youth market in the US over the last 60 years (since the baby boom), what can you suggest for marketers in these youth-orient..

  Compute expected share price-perpetual growth method

Suppose the dividends for the Seger Corporation over the past six years were $1.51, $1.59, $1.68, $1.76, $1.86, and $1.91, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method.

  Assume that radiologist group practice has cost structure

Assume that a radiologist group practice has the following cost structure: Assume that the group is considering contracting with a single payer who requires a 10% discount on charges for all patients. Re-do a-d and explain whether the group should ta..

  Riskless zero coupon bonds

Suppose a stock, which pays no dividends, sells for $10 today. Next period, it will either move to $7 or $14. You do not know the probabilities of these two outcomes. Riskless zero coupon bonds, paying $1.10 in one period, cost $1.00 today. What pric..

  Stock price according to the constant growth dividend model

The black forest cake company just paid an annual dividend of $1.25. If you expect a constant growth rate of 5.98%, and have a required rate of return of 10.71%, what is the current stock price according to the constant growth Dividend model?

  What is the bonds yield to maturity and yield to call

General Electric has just issued a callable (at par) ten-year 8% coupon bond with annual coupon payments. The bond can be called at par in one year or anytime thereafter on a coupon payment date. It has a price of $104 and a face value of $104. What ..

  Calculate the stocks coefficient of variation

Expected return A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand Occurring Rate of Return If This Demand Occurs. Calculate the stock's standard deviation. Calculate the stock's expected r..

  What is the price of the option if it is european call

Consider an option on a dividend-paying stock when the stock price is $30, the exercise price is $29, the risk-free interest rate is 5% per annum, the volatility is 25% per annum, and the time to maturity is four months. What is the price of the opti..

  What is the percentage change in price of bond

Both bond A and bond B have 9.8 percent coupons and are priced at par value. Bond A has 9 years to maturity, while bond B has 20 years to maturity. a. If interest rates suddenly rise by 2.4 percent, what is the percentage change in price of bond A an..

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