The growth rate of industrial production-the inflation rate

Assignment Help Financial Management

Reference no: EM131053055

Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 3%, and IR 4.3%. A stock with a beta of 1.7 on IP and 1.2 on IR currently is expected to provide a rate of return of 14%. If industrial production actually grows by 7%, while the inflation rate turns out to be 6.0%, what is your revised estimate of the expected rate of return on the stock?

Reference no: EM131053055

Questions Cloud

Consultant for a new international development agency : You have been hired as historical consultant for a new international development agency known as the Klein Fund that has been formed to rectify what its founders perceive to be the past mistakes of the "shock doctrine" era from the 1970s to the ea..

What is a capital budgeting technique : What is a capital budgeting technique that generates a decision rule and associated metric for choosing projects, based on the total discounted value of their cash flows?

Enterprise application integration digital desktops : Information coming from a variety of business systems can appear on the executive desktop as a consolidated whole. Often referred to as a digital dashboard, the information contained in such a view might include the executive's schedule, current e..

Based on their total risk level : What is the correct ranking for the following stocks, highest to lowest, based on their total risk level? Night Ryder has an average return of 15 percent and a standard deviation of 35 percent. WholeMart has an average return of 13 percent and a stan..

The growth rate of industrial production-the inflation rate : Suppose that two factors have been identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 3%, and IR 4.3%. what is your revised estimate of the expected rate of return on the st..

List the steps in the writing process : List the steps in the writing process. With which ones are you already familiar? Which ones do you need to work on? Why?

What is block ownership-how does affect corporate governance : Suppose you decide (as decide (as did Steve jobs and Mark Zuckerberg) to start a company. Your product is a software platform that integrates a wide range of media devices, including laptop computers, desktop computers, digital video records, and cel..

The real world case on valero energy : Refer to the Real World Case on Valero Energy and others in the chapter. Information is one part (albeit a very important one) of decision making, with managers being the other.

Spiegelman began working on maus and five years : in 1987, nine years after Spiegelman began working on Maus and five years after the death of his father. What is the purpose of this narrative, how is it presented, and what does it tell us about the author's relationship with his father and with ..

User Account

All Pages