The estimated rate of return of the investment. Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

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Answer 1

Question

Chapter 10, Problem 1PS

Summary Introduction

To calculate: The estimated rate of return of the investment.

Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Expert Solution & Answer

Answer to Problem 1PS

The expected rate of return is 15.5% of the stock.

Explanation of Solution

Here, the expected rate of return is calculated as given below,

Return rate = [E(R)+β1F1+β2F2] , here first we calculated F1 and F2 .

Now calculate F1 , A the value of actual (IP) is 5% and E (IP) is 3%

F1 = 5% − 3% = 2%

Now calculate factor F2 , F2= [Actual (IR) – E (IR)],

F2= 8% − 5% = 3%,

Now substitute the values of factor in equation, we get,

Return rate(R)=[E(R)+β1F1+β2F2]=12%+1×2%+0.5×3%=15.5%

Hence the expected rate of return is 15.5 % for the firm.

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Students have asked these similar questions

The relationship of required rate of return and risk shows the linearity in the: a.None of these b.Capital market line c.Security market line d.Asset market line

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Answer 2

Question

Chapter 10, Problem 1PS

Summary Introduction

To calculate: The estimated rate of return of the investment.

Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Expert Solution & Answer

Answer to Problem 1PS

The expected rate of return is 15.5% of the stock.

Explanation of Solution

Here, the expected rate of return is calculated as given below,

Return rate = [E(R)+β1F1+β2F2] , here first we calculated F1 and F2 .

Now calculate F1 , A the value of actual (IP) is 5% and E (IP) is 3%

F1 = 5% − 3% = 2%

Now calculate factor F2 , F2= [Actual (IR) – E (IR)],

F2= 8% − 5% = 3%,

Now substitute the values of factor in equation, we get,

Return rate(R)=[E(R)+β1F1+β2F2]=12%+1×2%+0.5×3%=15.5%

Hence the expected rate of return is 15.5 % for the firm.

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Answer 3

Question

Chapter 10, Problem 1PS

Summary Introduction

To calculate: The estimated rate of return of the investment.

Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Expert Solution & Answer

Answer to Problem 1PS

The expected rate of return is 15.5% of the stock.

Explanation of Solution

Here, the expected rate of return is calculated as given below,

Return rate = [E(R)+β1F1+β2F2] , here first we calculated F1 and F2 .

Now calculate F1 , A the value of actual (IP) is 5% and E (IP) is 3%

F1 = 5% − 3% = 2%

Now calculate factor F2 , F2= [Actual (IR) – E (IR)],

F2= 8% − 5% = 3%,

Now substitute the values of factor in equation, we get,

Return rate(R)=[E(R)+β1F1+β2F2]=12%+1×2%+0.5×3%=15.5%

Hence the expected rate of return is 15.5 % for the firm.

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Answer 4

Question

Chapter 10, Problem 1PS

Summary Introduction

To calculate: The estimated rate of return of the investment.

Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Expert Solution & Answer

Answer to Problem 1PS

The expected rate of return is 15.5% of the stock.

Explanation of Solution

Here, the expected rate of return is calculated as given below,

Return rate = [E(R)+β1F1+β2F2] , here first we calculated F1 and F2 .

Now calculate F1 , A the value of actual (IP) is 5% and E (IP) is 3%

F1 = 5% − 3% = 2%

Now calculate factor F2 , F2= [Actual (IR) – E (IR)],

F2= 8% − 5% = 3%,

Now substitute the values of factor in equation, we get,

Return rate(R)=[E(R)+β1F1+β2F2]=12%+1×2%+0.5×3%=15.5%

Hence the expected rate of return is 15.5 % for the firm.

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Answer 5

Chapter 10, Problem 1PS

Summary Introduction

To calculate: The estimated rate of return of the investment.

Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Expert Solution & Answer

Answer to Problem 1PS

The expected rate of return is 15.5% of the stock.

Explanation of Solution

Here, the expected rate of return is calculated as given below,

Return rate = [E(R)+β1F1+β2F2] , here first we calculated F1 and F2 .

Now calculate F1 , A the value of actual (IP) is 5% and E (IP) is 3%

F1 = 5% − 3% = 2%

Now calculate factor F2 , F2= [Actual (IR) – E (IR)],

F2= 8% − 5% = 3%,

Now substitute the values of factor in equation, we get,

Return rate(R)=[E(R)+β1F1+β2F2]=12%+1×2%+0.5×3%=15.5%

Hence the expected rate of return is 15.5 % for the firm.

Answer 6

Chapter 10, Problem 1PS

Summary Introduction

To calculate: The estimated rate of return of the investment.

Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Expert Solution & Answer

Answer to Problem 1PS

The expected rate of return is 15.5% of the stock.

Explanation of Solution

Here, the expected rate of return is calculated as given below,

Return rate = [E(R)+β1F1+β2F2] , here first we calculated F1 and F2 .

Now calculate F1 , A the value of actual (IP) is 5% and E (IP) is 3%

F1 = 5% − 3% = 2%

Now calculate factor F2 , F2= [Actual (IR) – E (IR)],

F2= 8% − 5% = 3%,

Now substitute the values of factor in equation, we get,

Return rate(R)=[E(R)+β1F1+β2F2]=12%+1×2%+0.5×3%=15.5%

Hence the expected rate of return is 15.5 % for the firm.

Answer 7

Chapter 10, Problem 1PS

Summary Introduction

To calculate: The estimated rate of return of the investment.

Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Answer 8

Expert Solution & Answer

Answer to Problem 1PS

The expected rate of return is 15.5% of the stock.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Here, the expected rate of return is calculated as given below,

Return rate = [E(R)+β1F1+β2F2] , here first we calculated F1 and F2 .

Now calculate F1 , A the value of actual (IP) is 5% and E (IP) is 3%

F1 = 5% − 3% = 2%

Now calculate factor F2 , F2= [Actual (IR) – E (IR)],

F2= 8% − 5% = 3%,

Now substitute the values of factor in equation, we get,

Return rate(R)=[E(R)+β1F1+β2F2]=12%+1×2%+0.5×3%=15.5%

Hence the expected rate of return is 15.5 % for the firm.

Answer 12

Ch. 10 - Prob. 1PS Ch. 10 - Prob. 2PS Ch. 10 - Prob. 3PS Ch. 10 - Prob. 4PS Ch. 10 - Prob. 5PS Ch. 10 - Prob. 6PS Ch. 10 - Prob. 7PS Ch. 10 - Prob. 8PS Ch. 10 - Prob. 9PS Ch. 10 - Prob. 10PS

The estimated rate of return of the investment. Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Videos

To calculate: The estimated rate of return of the investment.

Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Answer to Problem 1PS

Explanation of Solution

Want to see more full solutions like this?

Chapter 10 Solutions

The estimated rate of return of the investment. Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Videos

To calculate: The estimated rate of return of the investment. Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.

Answer to Problem 1PS

Explanation of Solution

Want to see more full solutions like this?

Chapter 10 Solutions

To calculate: The estimated rate of return of the investment.

Introduction: The expected rate of return is the value which is expected by the investor after the completion of the maturity period of the investment. This gives the security to the investor for his assumptions.