Stocks X and Y have the following data. Assuming the stock market is efficient andthe stocks are in equilibrium, which of the following statements is CORRECT?PriceExpected growth(constant)Required returnXO b)$505%10%Y$506%11%a) Stock Y has a higher dividend yield than Stock X.One year from now, Stock X's price is expected to be higher than Stock Yprice.c) Stock X has the higher expected year-end dividend.d) Stock Y has a higher capital gains yield.e) Stock X has a higher dividend vield than Stock V

The following information given in the question: When we compare the tools security is also we…

Answered: llowing data. Assuming the stock market…

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

See similar textbooks

Similar questions

Questions: Refer to the data of Omani common stock at below table, answer the following questions: Calculate the required rate of return (RRR) of stock. If beta coefficient decreases from 1.5 t0 0.5, what is the affect required rate of return. Build a theoretical framework depends on result of above questions. Beta Coefficient Stock Market Return Risk-free Return 1.5 10% 6%
None
the last question, please.
An analyst has estimated how a particular stock’s return will vary depending on what will happen to the economy. What is the standard deviation? STATE OF THEECONOMY PROBABILITY OFSTATE OCCURRING STOCK'S EXPECTEDRATE IF THISSTATE OCCURS Recession Below Average Average Above Average Boom .10 .20 .40 .20 .10 (.60) (.10) .15 .40 .90
If markets are in equilibrium, which of the following conditions will exist? a. Each stock's expected return should equal its required return as seen by the marginal investor. b. All stocks should have the same expected return as seen by the marginal investor. c. The expected and required returns on stocks and bonds should be equal. d. All stocks should have the same realized return during the coming year. e. Each stock's expected return should equal its realized return as seen by the marginal investor.
3. Assume that the market is in equilibrium and that stock betas can be estimated with historical data. The returns on the market, the returns on United Fund (UF), the risk-free rate (7.00%), and the required return on the United Fund (15.00%) are shown below. Based on this information, what is the required return on the market, ? Year 2011 2012 2013 2014 2015 Market -9% 11% 15% 5% -1% UF -14% 16% 22% 7% -2%
2. Assume that the CAPM is a good description of stock price returns. The market expected return is 8% with 12% volatility and the risk-free rate is 3.5%. New news arrives that does not change any of these numbers but it does change the expected return of the following stocks: 1. a. At current market prices, which stocks represent buying opportunities? b. On which stocks should you put a sell order in? Complete the table with the alphas below: (Round to one decimal place.) Expected Return Volatility Beta Alpha Green Leaf 12% 20% 1.50 % NatSam 10% 40% 1.80 % HanBel 9% 30% 0.75 % Rebecca Automobile 6% 35% 1.20 %
Consider the following information: State of Economy Boom Probability of State of Economy Security Returns if State Occurs (Stock A) Security Returns if State Occurs (Stock B) Security Returns if State Occurs (Stock C) .10 .18 .48 .33 Good Poor ? .11 .18 .15 Bust .40 .30 .05 -.09 -.05 -.03 -.32 -.09 Your portfolio is invested 30 percent each in Stocks A and C and the rest in Stock B. What is the percentage standard deviation of the portfolio?
Shepherd's Flock stock is expected to produce the following returns given the various states of the economy. What is the expected return on this stock? State of economy Probability of State of Economy Rate of Return Recession .3 -.27 Normal .65 .16 Boom .05 .35
Assume that the CAPM is a good description of stock price returns. The market expected return is 7% with 10% volatility and the risk-free rate is 3%. New news arrives that does not change any of these numbers but it does change the expected return of the following stocks: - a. Calculate the alpha for each stock in the table. b. At current market prices, which stocks represent buying opportunities? On which stocks should you put a sell order in? a. Calculate the alpha for each stock in the table. Complete the table with the alphas below: (Round to two decimal places.) Green Leaf Expected Return Volatility 12% 20% Beta Alpha 1.50 %% Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Expected Return Volatility Beta Green Leaf 12% 20% 1.50 NatSam 10% 40% 1.80 HanBel 9% 30% 0.75 Rebecca Automobile 6% 35% 1.20 - X
A. If a stock costs $55 one month and drops to $45 the next month, what is the expected stock price the next month, if we assume the stock follows a random walk? B. Explain both technical and fundamental analysis and what form of the efficient market hypothesis corresponds to each.
You are analyzing a stock that has the following returns given the various states of economy. State of Economy Probability Return Recession 0.12 -7.20 Normal 0.68 6.80 Boom 0.2 15.40 What is the expected return on this stock?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS