QUESTION 1Your rate of return expectations for the stock of Gidimadjor Company during the nextyear arePossible Rate of Return (kk) Possible Rate of ReturnProbability(Gidimadjor Itd)-0.600.560.15-0.300.360.10-0.10-0.080.050.200.020.400.400.330.200.800.510.10a. Compute the expected return [E(Ri)] on this stock, the variance (o2) of this return, and itsstandard deviation (a).b. On the basis of expected return [E(Ri)] alone, discuss whether KK Itd. Or Gidimadjor ispreferable.c. On the basis of standard deviation (6) alone, discuss whether KK Itd. Or Gidimadjor ispreferable.d. Compute the coefficients of variation (CVs) for KK Itd and Gidimadjor and discuss whichstock return series has the greater relative dispersion.

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Your rate of return expectations for the stock of Gidimadjor Company during the next year are Possible Rate of Return (kk) Possible Rate of Return Probability (Gidimadjor Itd) -0.60 0.56 0.15 -0.30 0.36 0.10 -0.10 -0.08 0.05 0.20 0.02 0.40 0.40 0.33 0.20 0.80 0.51 0.10 a. Compute the expected return [E(Ri)] on this stock, the variance (o2) of this return, and its standard deviation (6). b. On the basis of expected return [E(Ri)] alone, discuss whether KK Itd. Or Gidimadjor is

Your rate of return expectations for the stock of Gidimadjor Company during the next year are Possible Rate of Return (kk) Possible Rate of Return Probability (Gidimadjor Itd) -0.60 0.56 0.15 -0.30 0.36 0.10 -0.10 -0.08 0.05 0.20 0.02 0.40 0.40 0.33 0.20 0.80 0.51 0.10 a. Compute the expected return [E(Ri)] on this stock, the variance (o2) of this return, and its standard deviation (6). b. On the basis of expected return [E(Ri)] alone, discuss whether KK Itd. Or Gidimadjor is

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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3. The stock of Business Adventures sells for $100 per share. Its likely dividend payout and end-of year price depend on the state of the economy by the end of the year as follows: Boom Normal economy Recession Dividend $2.00 $1.00 $0.00 a. Calculate the expected holding period return and standard deviation of the holding-period return. Probability of Scenario 0.5 0.25 0.25 b. Stock Price $150 $115 $84 Calculate the expected return and standard deviation of a complete portfolio invested 60% in Business Adventures and 40% in Treasury bills. The return on the T-bill is 3%.
If D0 = $1.75, g (which is constant) = 3.6%, and P0 = $32.00, what is the stock's expected total return for the comingyear?
Suppose DO = $2.00. rs= 9%, What if g = 30% the first year, 20% the second year, and 10% the third year, and return to its long-run constant growth rate of 4%, Calculate the value of the stock today? O $62.7846 O $55.5021 O $60.3211 O $65.7223 O $72.3487
Use the table for the question(s) below. Consider the following realized annual returns: Index Stock A Year End Realized. Realized Return Return 23.6% 46.3% 24.7% 26.7% 30.5% 86.9% 9.0% 23.1% -2.0% 0.2% -17.3% -3.2% -24.3% -27.0% 32.2% 27.9% 4.4% -5.1% 7.4% -11.3% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Suppose that you want to use the 10-year historical average return on Stock A to forecast the expected future return on Stock A. The 95% confidence interval for your estimate of the expect return is closest to: O 6.5% to 26.3%. O-15.0% to 47.9%. -4.5% to 37.4%. 13.2% to 19.5%.
(Expected return and standard deviation) What is the expected return and standard devia- tion of the return for the next year on a stock that is selling for $30 now and has probabil- ities of 0.2, 0.6, and 0.2 of selling one year from now at $24, $33, and $39, respectively? Assume that no dividends will be paid on the stock during the next year and ignore taxes?
Required: Investors expect the market rate of return this year to be 19.00%. The expected rate of return on a stock with a beta of 1.2 is currently 22.80%. If the market return this year turns out to be 17.60%, how would you revise your expectation of the rate of return on the stock? (Do not round intermediate calculations. Round your answer to 1 decimal place.) Revised rate of return %
If Do $2.25, g (which is constant) = 3.5%, and Po= $80, then what is the stock's expected dividend yield for the coming year? 2.27% 3.61% 2.91% 2.97% 2.53%
SECURITY MARKET LINE You are given the following historical data on market returns, r, and the returns on Stocks A and B, r, and rp: 8A-2 M' A Year 1 29.00% 29.00% 20.00% 2 15.20 15.20 13.10 (10.00) (10.00) 0.50 4 3.30 3.30 7.15 5 23.00 23.00 17.00 31.70 31.70 21.35
A stock price P0=$23, and is expected to pay D1 = $1.242 one year from now and to grow at a constant rate of g=8% in the future. Suppose this analysis was conducted in January 1, 2002, what is the expected price at the end of 2002 and what is the Capital gains yield?
Northern Wear stock has an expected return of 14.6 percent. Given the information below, what is the expected return on this stock if the economy is normal? Probability of State of Economy .15 State of Economy Rate of Return Recession Normal -05 .80 Воom .05 .19 O 13 percent O 16 percent 18 percent O 21 percent O 23 percent
PLEASE ANSWER CORRECTLY FULLY DONT GIVE ME THE WRONG ANSWER
Review the following market information: Current Stock Market Return 11.25% Current T-Bill Price $979.43 Historic T-Bill Average Return 2.80% Historic Stock Market Average Return 8.10% Stock Beta 1.23 What is the required return (rounded to two places)?

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