What is the expected return on stock in percent

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Reference no: EM132024210

1. There are three possible states of nature--boom, normality, and bust--with probabilities .2, .6, and .2. In these three states, Stock A has expected future returns of -12.1, 5.8, and 17.2 percent. What is the expected return on Stock A in percent?

2. Interior Airline is expected to pay a dividend of $3 in the upcoming year. Dividends are expected to grow at the rate of 10% per year. The risk-free rate of return is 4%, and the expected return on the market portfolio is 13%. The stock of Interior Airline has a beta of 4. Using the constant-growth DDM, the intrinsic value of the stock is_______.

Reference no: EM132024210

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