What is the expected return of the security

Assignment Help Financial Management

Reference no: EM131859804

1. Assume that you are trying to predict the return of a security in a two (risk) factor model. The risk free rate is 5%, the risk premium on the first factor is 3%, the risk premium on the second factor is 5%. The beta of the first factor is 1.2 and the beta of the second factor is 0.8. What is the expected return of the security?

A. 12.6%

B. 11%

C. 13.8%

D. There is not enough information to determine the expected return

2. Stocks A and B had the following performance in the past three years. please calculate the average rate of return, standard deviation, and CV ratios for these two stocks. Which did better?

year stock A Stock B

2014 0.06 0.05

2015 0.20 0.10

2016 0.10 0.15

Reference no: EM131859804

Questions Cloud

Filing joint tax return what is adjusted gross income : On their 2016 Married Filing Joint tax return what is their (a) adjusted gross income; (b) their total itemized deductions; (c) the amount of their exemptions;

Bond maturity-what is the current price of the bond : Suppose you have a bond with 4 years to maturity. what is the current price of the bond?

What is your best estimate of the company cost of equity : If the stock sells for $32 per share, what is your best estimate of the company's cost of equity?

What is primary form of firm maximize stock price per share : Do large corporations tax more favorable than sole proprietorship? What’s the primary form of a firm maximize stock price per share.

What is the expected return of the security : Assume that you are trying to predict the return of a security in a two (risk) factor model. What is the expected return of the security?

Company external investment rate is the same as its MARR : If the company's external investment rate is the same as its MARR at 18%, what is the ERR of the project?

Which is also its expected return on new investment : Laurel Enterprises expects earnings next year of ?$3.69 per share and has a 40% retention? rate, which is also its expected return on new investment.

You own fixed-income asset with duration of six years : You own a fixed-income asset with a duration of six years. If the level of interest rates, which is currently 8.2%, goes down by 10 basis points,

The current ratio will never exceed the quick ratio : The current ratio will never exceed the quick ratio. The quick ratio is a better measure of a firm's luquidity than the current ratio.

User Account

All Pages