4. Measuring standalone risk using realized dataReturns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results.Analysts across companies use realized stock returns to estimate the risk of a stock.Five years of realized returns for Blue Llama Mining Inc. (Blue Llama) are given in the following table:2016201720182019Stock return 10.00% 6.80% 12.00% 16.80%Also note that:20205.20%1. While Blue Llama was started 40 years ago, its common stock has been publicly traded for the past 25 years.2. The returns on Blue Llama's equity are calculated as arithmetic returns.Given this return data, the average realized return on Blue Llama Mining Inc.'s stock isThe preceding data series represents a sample of Blue Llama's historical returns. Based on this conclusion, the standard deviation of Blue Llama'shistorical returns isIf investors expect the average realized return on Blue Llama Mining Inc.'s stock from 2016 to 2020 to continue into the future, its expected coefficientof variation (CV) is expected to equal

Standard deviation is the measure of risk and can be measured as the deviation from the mean return…

Answered: turns earned over a given time period…

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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Given the information below for Seger Corporation, compute the expected share price at the end of 2022 using price ratio analysis. Assume that the historical (arithmetic) average growth rates will remain the same for 2022. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Year Price EPS CFPS SPS 2016 $ 56.90 2.50 7.32 34.80 Using PE ratio Using P/CF ratio Using P/S ratio 2017 $ 62.80 3.21 8.28 39.80 2018 $61.50 4.01 8.74 39.20 Share Price 2019 2020 $59.00 $ 80.50 7.05 11.83 53.90 4.71 10.17 42.70 2021 $95.90 8.05 13.12 61.90
Suppose you purchased Spotlight Co.'s stock on Nov 1, 2015 and held it for one year, selling on Oct 31, 2016. What was your annual realized return? Price Dividend Date Nov 01 15 Feb 15 16 Aug 15 16 Oct 31 16 30 28 27 29 55 1.5 0.5
Example: Stock Valuation Consider the following information for the company Fledgling Electronics: Expected earnings per share at the end of year $8.33 Expected dividend per share at the end of year $5 Market capitalization rate (r) 15% Expected growth rate dividends (per year) 10% 1. Calculate the current price per share of Fledgling Electronics 2. Calculate the capitalized value of Fledgling's EPS if it had a no growth policy 3. Calculate the present value of Fledgling's growth opportunities
Roundall dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percentrounded to one decimal place. 26. The historical stock returns for GAF, Inc. are listed below: Year -Annual Stock Return2013 -12%2014 14%2015 35%2016 2%2017 -16%2018 8%2019 0%2020 34%2021 12%2022 6% What is the standard deviation of returns for GAF, Inc. stock over the 10-year time period? (Compute the standard deviation assuming this is a population of returns, not a sample – that is, use the procedure describedin the textbook for calculating the standard deviation of a series of stock returns).27. The end of year stock price and the dividend paid each year for Maxwell, Inc. stock for years 0 through 6 arelisted in the table below: Year -End of Year Stock Price- Dividend0 $12.00 $ 01 $14.86 $1.802 $7.95 $1.883 $8.00…
The analysis of risk and the search for yield in companies is determinant for financial success. In this case, consider the stock price and dividends of the companies Power Electric Industries, Riviera Power Inc. and Nature Energy Corp. for the period from 2014 to 2019. Power Electric Industries Power Electric Industries Riviera Power Inc. Riviera Power Inc. Nature Energy Corp. Nature Energy Corp. year Year Stock price Dividends Year Stock price Dividends Year Stock price Dividends 2019 $18.5 $1.50 $38.5 $4.50 $58.5 $3.50 2018 $15.93 $1.10 $40.93 $3.10 $50.93 $2.10 2017 $10.20 $1.00 $43.20 $3.00 $53.20 $3.00 2016 $9.80 $0.90 $50.80 $2.90 $50.80 $2.90 2015 $8.50 $0.85 $48.50 $2.85 $48.50 $2.75 2014 $8.00 $0.80 $45.00 $2.80 $45.00 $2.60 1. Consider the companies' data to calculate annual rates of return. Determine the average return for each figure over the 5-year period. (You…
A Residual Earnings Valuation (Easy) An analyst presents you with the following pro forma (in millions of dollars) that gives her forecast of earnings and dividends for 2013-2017. She asks you to value the 1,380 million shares outstanding at the end of 2012, when common shareholders' equity stood at $4,310 million. Use a required return for equity of 10 percent in your calculations. Earnings Dividends 2013E 388.0 115.0 2014E 570.0 160.0 2015E 599.0 349.0 2016E 629.0 367.0 2017E 660.4 385.4 Chapter 5 Accrual Accounting and Valuation: Pricing Book Values 169 a. Forecast book value, return on common equity (ROCE), and residual earnings for each of the years 2013-2017. b. Forecast growth rates for book value and residual earnings for each of the years 2014-2017. c. Calculate the per-share value of the equity from this pro forma. Would you call this a Case 1, 2, or 3 valuation? d. What is the premium over book value given by your calculation? What is the P/B ratio?
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Given the following annual returns for Fort Corporation, Smith Industries and the market. Fort's Smith's Market Year Rate of Return (%) Rate of Return (%) Rate of Return (%) 2015 6 5 -3 2016 10 15 8 2017 11 15 20 2018 10 10 10 2019 13 10 5 Calculate the mean return of a portfolio formed from Fort stock and the Market (25% invested in Fort). 8% a. 8.5% 10.75% с. 40% d.
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Given the information below for Seger Corporation, compute the expected share price at the end of 2022 using price ratio analysis. Assume that the historical (arithmetic) average growth rates will remain the same for 2022. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Year Price EPS CFPS SPS 2016 $81.90 $81.90 3.20 7.67. 64.00 Using PE ratio Using P/CF ratio Using P/S ratio 2017 $ 87.80 3.91 8.56 69.00 2018 $ 86.50 4.71 8.95 68.40 Share Price 2021 2019 2020 $84.00 $ 105.50 $ 120.90 7.40 8.40 12.04 13.26 83.10 91.10 5.41 10.52 71.90
1

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