What is the expected return for the stock

Assignment Help Financial Management
Reference no: EM131572762

Stock ABC has a beta of 1.4 and the standard deviation of its returns is 30%. The market risk premium is 5% and the risk-free rate is 3%.

1. What is the expected return for the stock?

2 .What are the expected return and standard deviation for a portfolio that is equally invested in the stock and the risk-free asset?

3. If you forecast that next year stock ABC will have return of 10%. Would you buy it? Why or why not?

Reference no: EM131572762

Questions Cloud

Ytm on a bond is interest rate you earn on your investment : The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. What is the HPY on your investment?
Investment funds into money market mutual fund : You are contemplating putting part of your investment funds into a money market mutual fund (mmf).
Different types of financial markets-financial institutions : Identify the different types of financial markets and financial institutions and realize how these markets and institutions enhance capital allocation.
What rate of interest is penn station earning on investment : Penn Station is saving money to build a new loading platform. What rate of interest is Penn Station earning on this investment?
What is the expected return for the stock : Stock ABC has a beta of 1.4 and the standard deviation of its returns is 30%. What is the expected return for the stock?
Find the present value under the conditions : Suppose you are expected to receive $10,000 in exactly 10 years. Find the present value under the following conditions. Assume the APR = 12%
What is your estimate of an appropriate stock price : If the benchmark price–sales ratio is 5, what is your estimate of an appropriate stock price?
Relationships cannot be derived from accounting equation : Which of the following relationships cannot be derived from the accounting equation
Bond ratings to make their investment decisions : How do bond investors rely on bond ratings to make their investment decisions? What is unethical in this situation?

Reviews

Write a Review

Financial Management Questions & Answers

  Outstanding shares with four shareholders

Bilkis Brans has 20,000 outstanding shares with four shareholders. Ester owns 9,000 shares, Mendez owns 4,000 shares, Judy owns 4,000 shares,

  Redo the analysis of the schleifer vishny model

Redo the analysis of the Schleifer-Vishny model with this modification, and determine the sign of the investment externality.

  What impact would a revaluation upward have

A small Canadian company has contracted to purchase 100,000 toys for £ 3.50 each from a British company. The Canadians have agreed to pay in pounds ( £). The Canadians have also agreed to sell the toys to a U.S. company for U.S.$5.50 per toy. What im..

  With regards to financial statement and operating indicator

With regards to financial statement and operating indicator analyses:

  The systems will reduce insurance claims

Atlas Transportation is considering installing temperature logger in all its refrigerated trucks for monitoring temperatures during transit.

  The forward rate is the future spot rate

There does not exist a financial instrument to insure against the default of bonds or asset-backed debt securities. In the case of two random variables, X and Y , that are independent, the variance of X + Y is simply the sum of the variances of both ..

  What is equivalent anual annuity for the ukraine project

What is the equivalent anual annuity (EAA) for the Ukraine project? What is the EAA for the Spanish project?

  Bonds two years ago at coupon rate

Night Hawk Co. issued 16-year bonds two years ago at a coupon rate of 9.5 percent.

  Explain what does the market believe will be the stock price

The dividend is expected to grow at some constant rate g, the stock currently sells for $33 a share. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years (i.e.,what is P^3)?

  Flight to quality causes yields on government bond

The phenomenon known as "flight to quality" causes yields on government bond and corporate bonds. A single bond issue with multiple maturity dates is called. The required return on a bond is equal to. The current yield on a bond is most similar to

  The gross amount of an invoice with freight charge

The gross amount of an invoice with freight charge included is $500. The freight charge is $100. The invoice is dated November 29 with terms of 1/10 EOM. Payment is made on January 4. Find: (a) the cash discount, and (b) the net amount paid.

  Bonds make semiannual payments and have par value

Sqeekers Co. issued 14-year bonds a year ago at a coupon rate of 8.6 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.9 percent, what is the current bond price?

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