What is the expected return of this stock

Assignment Help Financial Management
Reference no: EM131342454

The stock of Hogwarts Inc. is expected to lose 14% in a recession and earn 17% in a boom. The probability of a recession and a boom is 20% and 80% respectively.

What is the expected return of this stock?

Reference no: EM131342454

Questions Cloud

Depreciated using five-year macrs depreciation schedule : Zippy Corporation just purchased computing equipment for $22,000. The equipment will be depreciated using a five-year MACRS depreciation schedule. If the equipment is sold at the end of its fourth year for $14,000, what are the after-tax proceeds fro..
What does an increase in accounts payable imply : What does an increase in accounts payable imply? How would this increase in accounts payable be reported under the indirect method?
Structure were damaged or destroyed : Select at least 2 cell structures. What hypothesis could you form to explain what would happen to the cell or the organism if each cell structure were damaged or destroyed?
Loss reported on the statement of cash flows : Where do the components of the changes in retained earnings appear in the statement of cash flows? Assume the indirect method is used to prepare the statement of cash flows.
What is the expected return of this stock : The stock of Hogwarts Inc. is expected to lose 14% in a recession and earn 17% in a boom. The probability of a recession and a boom is 20% and 80% respectively. What is the expected return of this stock?
What is the most common dna repair system : What is the most common DNA repair system in humans, involving enzymatic functions and replacement of damaged DNA bases?
Describe the three classes of carcinogens : 1. Describe the three classes of carcinogens and their sub classes; describe the role each plays in the cancer process and give chemical examples.
The primary purpose of portfolio diversification : The primary purpose of portfolio diversification is to: When stock A’s price goes up, which of the following statements are true about the definition of “correlation”?
What is a statement of cash flows : What is a statement of cash flows?- How do investors, creditors, and others typically use the information in the statement of cash flows?

Reviews

Write a Review

Financial Management Questions & Answers

  Presumed to be negligent under which legal doctrine

Dr. Jones is an orthopedic surgeon. One patient required arthroscopic surgery on his right knee because of cartilage damage. When the patient awoke from surgery, he was surprised to see bandages on both knees. He was told that Dr. Jones made an incis..

  Allocative efficiency can be defined

Allocative efficiency can be defined as: The difference between the total profit change and the profit-linked productivity change. The point at which, for any mix of inputs that will produce a given output, no more of any one input is used than is ab..

  How changes in uk and euro real interest rates will affect

Measuring effects on exchange rates. Tarheel Co. plans to determine how changes in UK and euro real interest rates will affect the value of the British pound.

  Firms expected dividend per share and growth rate

Coca-Cola stock has an expected ROE of 14% per year, expected earnings per share of $4, and expected dividends of $2.50 per share. Its market capitalization rate is 15% per year. what are its expected growth rate, its price and its P/E ratio? b) If t..

  Expansion project-What is the projects NPV

Down Under Boomerang, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $3 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which it will b..

  Manager is saying the firm is undervalued or overvalued

A manager believes his firm will earn a 11.50 percent return next year. His firm has a beta of 1.40, the expected return on the market is 9.0 percent, and the risk-free rate is 4.0 percent. Compute the return the firm should earn given its level of r..

  Determine the effective price at which you purchased coffee

Determine the effective price at which you purchased your coffee. How do you account for the difference in amounts for the spot and hedge positions?

  Determine the depreciation schedules

An equipment costing $20,000 for assembling an electronics assembly is being considered by Sam Electronics in Cookeville, Tennessee. The equipment will have a salvage value of $5000 at the end of its life of 4 years. Determine the depreciation schedu..

  What are treynor indexes of market and the risky? stock

The? risk-free rate is 2.6% and the expected market return is 9.3%. A risky stock has a beta of 1.44. If CAPM? holds, what are the Treynor indexes of the market and the risky? stock?

  Exchanges the building for investment land worth

Glen owns a building that is used in business. The building is worth $200,000, but is subject to a mortgage of $40,000. Glen's basis in the building is $120,000. Glen exchanges the building for investment land worth $150,000 plus $10,000 cash. In add..

  Target capital structure-the relevant tax rate

Mullineaux Corporation has a target capital structure of 61 percent common stock, 6 percent preferred stock, and 33 percent debt. Its cost of equity is 12.6 percent, the cost of preferred stock is 5.6 percent, and the cost of debt is 7.3 percent.

  Is there an arbitrage profit opportunity here

Suppose that you noticed the following prices: P=$48; S=$4; X=$50, for a one year European put option. The simple risk-free interest rate is 10% per year. Is there an arbitrage profit opportunity here? Yes or no?

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