None QUESTION:34Analyzing the rates of return on United Futon's ordinary shares over60 months indicates a beta of 1.45 and an alpha of -0.2% per month.The following month, the market rose by 5 percent and United Futonby 6 percent. What is Futon's abnormal rate of return?

Step 1: Introduction to the Abnormal Return:Abnormal stock return is used to identify unusual price…

Answered: QUESTION:34 Analyzing the rates of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 27P

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Analysis of 60 monthly rates of return on United Futon common stock indicates a beta of 1.53 and an alpha of –0.28% per month. A month later, the market is up by 5.8%, and United Futon is up by 6.8%. What is Futon’s abnormal rate of return?
Analysis of 60 monthly rates of return on United Futon common stock indicates a beta of 1.54 and an alpha of -0.29% per month. A month later, the market is up by 5.9%, and United Futon is up by 6.9%. What is Futon's abnormal rate of return? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Rate of return % K
Analysis of 60 monthly rates of return on United Futon common stock indicates a beta of 1.46 and an alpha of -0.21% per month. A month later, the market is up by 5.1%, and United Futon is up by 6.1 %. What is Futon's abnormal rate of return? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Rate of return (1.34)
Analysis of 60 monthly rates of return on United Futon common stock indicates a beta of 1.65 and an alpha of –0.40% per month. A month later, the market is up by 7%, and United Futon is up by 8%. What is Futon’s abnormal rate of return? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Use the Gordon Growth Model to estimate the cost of the ordinary shares (expressed as a percentage to two decimal places) from the information provided attached.
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4. Tannery Worldwide's common stock is currently selling for $48 a share. If the expected dividend at the end of the year is $2.40 and last year's dividend was $2.00, what is the rate of return implicit in the current stock price?
Problem 1: Nachman Industries just paid a dividend of Do = $1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock's current market value?
Calculating Real Returns and Risk Premiums You’ve observed the following returns on Bennington Corporation’s stock over the past five years: 13 percent, −8 percent, 16 percent, 16 percent, and 10 percent. Suppose the average inflation rate over this period was 1.5 percent and the average T-bill rate over the period was 5 percent. a. What was the average real return on the company's stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What was the average nominal risk premium on the company's stock?
D. (1) The shares of BrightStark Ltd. are expected to generate the following possible returns in one year. What is the expected return over the next 12 months? Assume that the stock pays no dividends. Return 3% 4% 7% 15% 25% Probability 0.05 0.25 0.30 0.25 0.15 (2) Suppose Brightlight, Inc. was trading at $27.29 per share. At that time, it pays an annual dividend of $0.32 per share, and analysts have set a 1-year target price around $33.30 per share. What is the expected return on this stock? (3) What is the price for a stock with an expected dividend and price next year of $1 and $30, respectively? Use a 10% discount rate. (4) What is the current share price for a firm which has just paid a dividend of £2.5 and expects to increase its dividend by 3.5% every year, and the company has a required rate of return of 5%?

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QUESTION:34 Analyzing the rates of return on United Futon's ordinary shares over 60 months indicates a beta of 1.45 and an alpha of -0.2% per month. The following month, the market rose by 5 percent and United Futon by 6 percent. What is Futon's abnormal rate of return?