What must investor do to achieve higher rate of return

Assignment Help Financial Management

Reference no: EM132012155

1. If the interest rate is rising and stock prices are simultaneously rising, then according to the fundamental theory of stock pricing:

A. The expected dividends of firms must be falling

B. Expected dividends of firms must be rising

C. The future price of the stock must be falling

D. There must be irrational agents in the market

2. What must an investor do to achieve a higher rate of return when the market risk premium is lower?

3. Consider the stable growth or steady state model of a stock price. If the price of the stock is $40 per share, the yield on the relevant bond is 6%, and the growth rate of dividends is expect to be 4%, then the current dividend will be?

4. Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 3.4% rate of inflation in the future. The real risk-free rate is 2%, and the market risk premium is 3.5%. Mudd has a beta of 1.3, and its realized rate of return has averaged 10% over the past 5 years. Round your answer to two decimal places.

Reference no: EM132012155

Questions Cloud

Diversified portfolio consisting : Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks.

Describe the distribution of carbon dioxide emissions : Use graphical and numerical summaries to describe the distribution of CO2 emissions for these vehicles. Be sure to justify your choice of summaries

How many possible outcomes are there to this lottery : Each night a drawing will select one from each of the categories. How many possible outcomes are there to this lottery.

Probability that an individual owns a tablet computer : What is the probability that an individual owns a tablet computer given that they own a smart phone?

What must investor do to achieve higher rate of return : What must an investor do to achieve a higher rate of return when the market risk premium is lower?

What will be required return on portfolio : If you invest the money in a stock with a beta of 1.15, what will be the required return on your $5.5 million portfolio?

Discuss about the multivariate analysis design : Your final prospectus project is due in Module 7. Considering the multivariate analysis design you plan to use in your prospectus, turn in a two- to three-page.

Find the probability and interpret the results : Find the probability and interpret the results. If? convenient, use technology to find the probability.

Research various oaths of office taken by different servants : Research various oaths of office taken by different public servants.Do these officials need additional codes of ethics to guide them?

User Account

All Pages