What is your best guess for the rate of return on the stock

Assignment Help Financial Management

Reference no: EM132020068

Suppose two factors are identified for the U. S. economy the growth rate of industrial production, IP and the rate, IR, IP is expected to be 4% and IR 6%. A stock with a beta of 1 on IP and 0.9 on IR currently is expected to provide a rate of return of 12%.

If industrial production actually grows by 5% while the inflation rate turns out to be 9%, what is your best guess for the rate of return on the stock? (Round your answer to 1 decimal place.)

Reference no: EM132020068

Questions Cloud

What is the expected rate of inflation over the next 10 year : Suppose the yield on a 10-year T-bond is currently 5.05% and that on a 10-year Treasury Inflation Protected Security (TIPS) is 1.80%.

Create a two-stock portfolio : Create a two-stock portfolio including the following two stocks: $4000 invested in Wal-mart. What is portfolio's beat?

How long will it take you to repay your debt : If you are being charged 15% interest per year, how long (to the nearest 0.5 years) will it take you to repay your debt?

Estimate of the three-year treasury rate two years from now : Assuming that the pure expectation theory is correct what is the market's estimate of the three-year Treasury rate two years from now?

What is your best guess for the rate of return on the stock : If industrial production actually grows by 5% while the inflation rate turns out to be 9%, what is your best guess for the rate of return on the stock?

What elements will have a lasting impact : What elements will have a lasting impact? Express any emotions, insights or comments that are present as we conclude the class

What are the initial and terminal conditions for bt : Write down the first order difference equation that{bt} satisfies. What are the initial and terminal conditions for {bt}?

How much will accumulate into the savings fund by the time : The last deposit will be in 20 years, how much will accumulate into the savings fund by the time the last deposit is made?

How much do you have to deposit today to make these withdraw : Your savings account pays an annualinterest rate of 1% on all deposited funds. How much do you have to deposit today to make these withdrawals?

User Account

All Pages