What is the expected rate of return on this stock

Assignment Help Financial Management
Reference no: EM131599591

Express Scripts stock is expected to earn 15% in a recession, 10% in a normal economy, and 5% in a booming economy. The probability of a boom is 20% while the probability of a normal economy is 50% and the chance of a recession is 30%. What is the expected rate of return on this stock?

8.50%

10.00%

9.50%

10.50%

None of the above

Reference no: EM131599591

Questions Cloud

Pure expectations theory holds regarding the term structure : One-year interest rates are 6 percent. Assume that the pure expectations theory holds regarding the term structure.
How much should you expect to pay per share : how much should you expect to pay per share if the required rate of return is 10%?
A capital gain occurs when : A capital gain occurs when:
What is the price of the stock today : CF Lee Inc.’s most recent dividend was $3 per share (D0). If the company’s beta is 1.5, what is the price of the stock today?
What is the expected rate of return on this stock : Express Scripts stock is expected to earn 15% in a recession, 10% in a normal economy, What is the expected rate of return on this stock?
What is the balance in accounts receivable at year-end : ABC Co. has an average collection period of 90 days. Total credit sales for the year were $6,000,000. What is the balance in accounts receivable at year-end?
What is the value of shareholders equity account for firm : What is the value of the shareholders’ equity account for this firm?
What is the correct recorded revenue figure-charity service : Greenville Hospital’s full established rate for a certain procedure is $200, What is the correct recorded revenue figure? Charity service is:
How much in dividends did the firm pay : On 12/31/15, Hite Industries reported retained earnings of $497,500 on its balance sheet, How much in dividends did the firm pay during 2015?

Reviews

Write a Review

Financial Management Questions & Answers

  Cash flows are the same in years

Project A costs $2,000, and its cash flows are the same in Years 1 through 10. Its IRR is 12%, and its WACC is 10%. What is the project's MIRR?

  What would the price be if the stock has a beta

Apocalyptica Corporation is expected to pay the following dividends over the next four years: $6, $12, $17, and $3.25. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends, forever. If the required return on the st..

  Calculate the market risk premium

Use the CAPM to calculate the market risk premium and the expected rate of return on the market.

  What would be the present value of a yearly annuity

What would be the Present Value of a yearly annuity of $105 per year for 10 years, if the appropriate rate of interest is 4.5% per year and the first payment arrives TODAY?

  What is the value the call option

The current price of a non-dividend-paying stock is $30. Over the next six months it is expected to rise to $36 or fall to $26. Assume the risk-free rate is zero. What is the value the call option?

  Celebritties raise money by issuing bonds to investors

With celebrity bonds, celebritties raise money by issuing bonds to investors. the royalties from sales of the music are used to pay interest and principal on the bonds. In april of 2009, EMI announced that it intended to securitize its back catalogue..

  Degree of accounting operating leverage equal

Ergotone Audio had a degree of accounting operating leverage equal to 1.60 during the most recent period. If the firm's EBITDA was $3,000 and its fixed costs were equal to $1,250, then what was Ergotone 's depreciation and amortization expense during..

  You put your inheritance in an account that earns

If you put your inheritance in an account that earns 7 percent interest compounded annually, how many years will it be before your inheritance grows to $33,000?

  Shares of common stock-preferred stock outstanding

WhackAmOle has 2 million shares of common stock outstanding, 1.5 million shares of preferred stock outstanding, and 50,000 bonds.

  Equilibrium in currency market at interest rate differential

Suppose that annualized interest rates on 3-month CD’s in the U.S. are .375% while in the Australia annualized interest rates on 3 month deposits are 1.10%. What must currency traders expect to happen to the exchange rate of the US $ in terms of the ..

  Publically traded health care organizations

Select one (1) of the following publically traded health care organizations: Universal Health Services (NYSE: UHS) or Health Management Associates (NYSE: HMA).

  How can the case manager assist the client

How can the case manager assist the client in transitioning to therapy when it is necessary?

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