User Account

All Pages

Standard deviation on stock i expected return

Assignment Help Finance Basics
Reference no: EM132033209

Consider the following information on Stocks I and II:  

RATE OF RETURN IF STATE OCCURS  STATE OF PROBABILITY OF ECONOMY STATE OF ECONOMY STOCK I STOCK II  

Recession                        0.08                                          -0.25                         -0.35

Normal                            0.23                                           0.37                           0.15

Irrational exuberance       0.69                                           0.29                           0.27

The market risk premium is 12 percent, and the risk-free rate is 5.4 percent.

For standard deviations: (Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))

For betas: (Round your answers to 2 decimal places. (e.g., 32.16))

The standard deviation on Stock I's expected return is  _____  percent, and the Stock I beta is ____ . The standard deviation on Stock II's expected return is ____  percent, and the Stock II beta is______ . Therefore, based on the stocks' systematic risk/beta, which stock is riskier?

Reference no: EM132033209

Questions Cloud

Explain what is interesting or surprising about this : DeSchutter and Vanloqueren show how there are many factors which make it look like the agroecology approach is not as good as it really is.
Identify opportunities for self-improvement : BIZ102 Understanding People and Organisations - Integrate strategies to effectively interact with others in a professional context - identify opportunities
What is dybvig cost of equity capital : If the risk-free rate is 5.00 percent and the expected return on the market is 9 percent, what is Dybvig's cost of equity capital?
Compute the pi statistic for project : Compute the PI statistic for Project Z if the appropriate cost of capital is 6 percent.
Standard deviation on stock i expected return : The standard deviation on Stock I's expected return is _____ percent, and the Stock I beta is ____ . The standard deviation on Stock II's expected return
Maximum amount the company could pay for the machine : What is the maximum amount the company could pay for the machine and still be financially no worse off that if it did not buy the machine?
What will be the rate of return on investment in bond : If the investors forecast accurately, what will be the rate of return on an investment in this bond over the next year?
What is the relationship between a methodology : What is the relationship between a Methodology, like Waterfall or Agile, and a Business Case?
What is the cash flow from salvage or disposal : If Low Country has a tax rate of 40%, what is the cash flow from salvage or disposal if the machine is sold at the end of the seven years for $20,000?

Reviews

Write a Review

Finance Basics Questions & Answers

  Describe possible result of treasury stock transactions

Castro Company, a newly formed company, issued 10,000 shares of its $10 par common stock for $15 per share. On July 1, 2007, Castro Company reacquired 1,000 shares of its outstanding stock for $12 each share.

  Crypton electronics has a capital structure consisting of

crypton electronics has a capital structure consisting of 36 common stock and 64 debt. a debt issue of 1000 par value

  How much money will be in the account 15 years from today

The first deposit will occur one year from today (that is, at t = 1) and the last deposit will occur 15 years from today (that is, at t = 15). How much money will be in the account 15 years from today?

  Describe and examine theories of risk management

Write a 2-page paper in which you describe and examine theories of risk management and types of risk. You are required to use at least two journal articles and follow proper APA format.

  What is the underwriting cost

The company's share price increases 14 per cent on the first day. What is the underwriting cost? (in millions of dollars to the nearest three decimal places)

  What will the value of the bond l be

What will the value of the Bond L be if the going interest rate is 4%? Round your answer to the nearest cent.

  Define the three conditions that make up a perfect capital

Define the three conditions that make up a perfect capital market, and then compare and contrast the effects of perfect capital markets and imperfect capital markets on value. Can they create or destroy value? Explain.

  Determining the ordinary income and capital gains

A firm has decided to replace an existing asset with a newer Model. The existing asset originally cost $30,000 . The current book value of the existing asset for tax purposes is $ 14,400. The existing asset can be sold for $ 25,000. The new asset ..

  What is the stock price for each company

The required return for each company's stock is 5 percent, 8 percent, and 11 percent, respectively. What is the stock price for each company?

  Categorize each of the given accepted accounting

Classify each of the following accepted accounting practices as conservative or aggressive.

  How many shares will the company repurchase

Green Manufacturing, Inc., plans to announce that it will issue $1.93 million of perpetual debt and use the proceeds to repurchase common stock.

  How much expected profit will ourx lose

How many doses does OuRx need to order so that the probability of running out of flu vaccine is only 25 percent? How much expected profit will OuRx lose.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd