Mini Sweet Gelato plc. analysed the report from scientists who predict the weather and climate in 2021 as follows. The probability of a hot summer is 0.3. The probability of a moderately warm summer is 0.2, whereas the probability of a wet and cold summer is 0.5. If a hot summer occurs then the return on shares in the Gelato manufacturing company will be 60 per cent. If moderately warm the return will be 30 per cent, and if cold 2 per cent. What is the expected return? and Zumba plc has excess earnings this year and decide to pay a dividend of £10 in year 1 and expects this grow constantly at 4%. Zumba has a discount rate of 12%, what is the share price please sedn the answeres within 20 mins
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Mini Sweet Gelato plc. analysed the report from scientists who predict the weather and climate in 2021 as follows. The probability of a hot summer is 0.3. The probability of a moderately warm summer is 0.2, whereas the probability of a wet and cold summer is 0.5. If a hot summer occurs then the return on shares in the Gelato manufacturing company will be 60 per cent. If moderately warm the return will be 30 per cent, and if cold 2 per cent. What is the expected return?
and
Zumba plc has excess earnings this year and decide to pay a dividend of £10 in year 1 and expects this grow constantly at 4%. Zumba has a discount rate of 12%, what is the share price
please sedn the answeres within 20 mins
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