Past returns and of inflationary expectations

Reference no: EM131104062

on the basis of analysis of past returns and of inflationary expectations, Marta Gomez feels that the expected return on stocks in general is 12 percent. The risk-free rate on short-term treasury securities is now 7 percent.Gomez is particularly interested un the return prospects for Kessler Electronics Corporation.Based on monthly data for the past five years,she has fitted a characteristic line to the responsiveness of excess returns of the stock to excess returns of the S&P 500 index and has found the slope of the line to be 1.67.If the financial markets are believed to be efficient,what return can she expect from investing in Kessler Electronics Corporation?

Reference no: EM131104062

Questions Cloud

Compensating balances suppose that dynamic sofa : b. Suppose that Dynamic's bank offers to forget about the compensating balance require- ment if the firm pays interest at a rate of 12 percent. Should the firm accept this offer? Why or why not?

What means are available to you to collect this data : What do you see as the most likely sources for crime and intelligence data? What means are available to you to collect this data?

What would be the effect of the error on the balance sheet : If the $3,900 cost of a new microcomputer and printer purchased for office use were recorded as a debit to Purchases, what would be the effect of the error on the balance sheet and income statement in the period in which the error was made?

Why some workers are paid above the equilibrium wage : Which of the following is not a reason why some workers are paid above the equilibrium wage?

Past returns and of inflationary expectations : on the basis of analysis of past returns and of inflationary expectations,Marta Gomez feels that the expected return on stocks in general is 12 percent.

Who has priority to the collateral : Metro claims that at the time of its loan it was unaware of HFCs interest. Between these parties, who has priority to the collateral? Discuss your answer. This portion of your assignment should be 1/2-1 page in length.

Determining the backward induction : Assume that if a player is indifferent between accepting or rejecting a division, then the player always accepts the division. Using backward induction, the prediction is that

Develop a probability distribution : In Gallup's Annual Consumption Habits Poll, telephone interviews were conducted for a random sample of 1014 adults aged 18 and over. One of the questions was "How many cups of coffee, if any, do you drink on an average day?" The following table sh..

Equilibrium market price and quantity traded : The U.S. Department of Agriculture has estimated (using statistical analysis) that the market for corn is characterized by a market demand given by QD = 200 - P, while the market supply is QS = 50 + 14 P.

User Account

All Pages