Expected retum. Hull Consultants, a famous think tank in the Midwest, has provided probability eslimales f8r the stable growth economy is 20%, the probability of a stagnant economy is 46%, and the probability of a recession is 19%. Estimate the expected returns on the following individual investments for the coming year, economic swers you will type. Hint. Make sure to round all intermediate calculatio Data Table What is the expected retum of the stock investmen % (Round to two decimal places.) (Click on the following icon e in order to copy its contents into a spreadsheet.) Forecasted Returns for Each Economy Stable Recession Stagnant 7% 5% 4% Investment Boom Growth 12% 11% Stock Corporate bond Government bond 28% 10% 8% 4% 9% 7% 3% Print Done

Expected retum. Hull Consultants, a famous think tank in the Midwest, has provided probability eslimales f8r the stable growth economy is 20%, the probability of a stagnant economy is 46%, and the probability of a recession is 19%. Estimate the expected returns on the following individual investments for the coming year, economic swers you will type. Hint. Make sure to round all intermediate calculatio Data Table What is the expected retum of the stock investmen % (Round to two decimal places.) (Click on the following icon e in order to copy its contents into a spreadsheet.) Forecasted Returns for Each Economy Stable Recession Stagnant 7% 5% 4% Investment Boom Growth 12% 11% Stock Corporate bond Government bond 28% 10% 8% 4% 9% 7% 3% Print Done

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company: High price Low price EPS Year 1 $ 85.61 68.33 6.46 a. High target price b. Low target price Year 2 $94.99 79.75 8.88 Year 3 $ 116.05 84.23 8.54 Year 4 $ 128.08 105.86 10.13 Earnings are expected to grow at 5.5 percent over the next year. a. What is the high target stock price over the next year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the low target stock price over the next year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Suppose that during the coming year, the risk free rate, rRF, is expected to remain the same, while the market risk premium (rM − rRF), is expected to fall. Given this forecast, which of the following statements is CORRECT? a. The required return on all stocks will remain unchanged. b. The required return will fall for all stocks, but it will fall more for stocks with higher betas. c. The required return for all stocks will fall by the same amount. d. The required return will fall for all stocks, but it will fall less for stocks with higher betas. e. The required return will increase for stocks with a beta less than 1.0 and will decrease for stocks with a beta greater than 1.0.
Your broker has developed a list of firms, their betas, and the return he expects the stock to yield over the next twelve months (labeled "Expected Return"). You have estimated that the risk-free rate is 5% and the return to the market will be 12%. Assuming that CAPM is correct, which stock should you purchase? Expected Return 10.5% Delta Vanlines 1.25 13.0 % 1.60 16.0% Firm Beta Anderson, Inc. 0.90 Nathan's Bakeries Z-man Electronics O Delta Vanlines 1.90 19.0% All of the stocks, Anderson, Inc. O Nathan's Bakeries OZ-man Electronics
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company. Year 1 $ 62.18 40.30 2.35 a. High target price b. Low target price Year 2 $67.29 43.18 2.58 Year 3- $74.18 39.27 2.73 Year 4 $78.27 46.21 High price Low price EPS Earnings are expected to grow at 9 percent over the next year. 6. What is the high target stock price in one year? 32.16. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. b. What is the low target stock price in one year? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. 2.890
Calculate the Beta of a stock that has annual returns of 18%, -10%, 16%, while the market (X-variable) has corresponding annual returns of 20%, -5%, 10% during each of these three years. (Hint: Your calculator should generate an average value of 8% for the stock = Y, if not re-check your data register).
Radhubhai
An analyst is studying the movement of the stock ABC. His research and came up with a different rates of return for ABC, 25% for strong and 10% for weak economic scenarios. Based on the latest economic outlook, the probability of having a strong, normal, and weak economy, are 30%, 50%, and 20%, respectively. The total expected return of ABC stock is 17% considering the various probabilities. Determine the rate of return of ABC if the economy turns normal.
You have the following data on the securities of three firms. If the risk-free rate last year was 3%, and the return on the market was 11%, which firm had the best performance on a risk-adjusted basis? Use CAPM to calculate expected returns and compare them with actual returns. Return last year Beta Firm A 10% 1.12 Firm B 11% 1.0 Firm C 12% 0.65 O Firm B O Firm C O There is no difference in performance on a risk-adjusted basis O Firm A

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