What is your expected rate of return on stock

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Reference no: EM132061841

1. You recently purchased a stock that is expected to earn 28 percent in a booming economy, 17 percent in a normal economy, and lose 2 percent in a recessionary economy. There is a 27 percent probability of a boom, a 65 percent chance of a normal economy, and a 8 percent chance of a recession. What is your expected rate of return on this stock?

15.00 percent

2.33 percent

14.33 percent

9.22 percent

18.45 percent

2. A stock has a beta of 1.45, the expected return on the market is 18 percent, and the risk-free rate is 6.3 percent. What must the expected return on this stock be?

24.43%

32.4%

22.1%

23.27%

24.2%

3. Bill Smith, age 25, took out $50,000 of straight-life insurance. His annual premium was $356.50. At the end of 20 years, the cash value of his policy is: (Use the tables in the handbook)

A. $825 B. $13,250 C. $1,423 D. $1,681 E. None of the above

Reference no: EM132061841

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