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You ask a stockbroker what the firm's research department expects for these three stocks. The broker responds with the following information: Stock Current Price Expected Price Expected Dividend 22 24 48 51 37 UND 40 0.75 2.00 1.25 Plot your estimated returns on the graph from Part a and indicate what actions you would take with regard to these stocks. Explain your decisions.

You ask a stockbroker what the firm's research department expects for these three stocks. The broker responds with the following information: Stock Current Price Expected Price Expected Dividend 22 24 48 51 37 UND 40 0.75 2.00 1.25 Plot your estimated returns on the graph from Part a and indicate what actions you would take with regard to these stocks. Explain your decisions.

Essentials Of Investments
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
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can you do the question b please

2. a. You expect an RFR of 10 percent and the market return (RM) of 14 percent. Compute the expected return for the following stocks, and plot them on an SML graph. E(R₁) Stock DZA U N b. You ask a stockbroker what the firm's research department expects for these three stocks. The broker responds with the following information: Stock Current Price Expected Price Expected Dividend 22 24 48 51 37 DZA U Beta 0.85 1.25 -0.20 N 40 0.75 2.00 1.25 Plot your estimated returns on the graph from Part a and indicate what actions you would take with regard to these stocks. Explain your decisions.
Transcribed Image Text:2. a. You expect an RFR of 10 percent and the market return (RM) of 14 percent. Compute the expected return for the following stocks, and plot them on an SML graph. E(R₁) Stock DZA U N b. You ask a stockbroker what the firm's research department expects for these three stocks. The broker responds with the following information: Stock Current Price Expected Price Expected Dividend 22 24 48 51 37 DZA U Beta 0.85 1.25 -0.20 N 40 0.75 2.00 1.25 Plot your estimated returns on the graph from Part a and indicate what actions you would take with regard to these stocks. Explain your decisions.
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