INVESTMENTS(LL)W/CONNECT
INVESTMENTS(LL)W/CONNECT
11th Edition
ISBN: 9781260433920
Author: Bodie
Publisher: McGraw-Hill Publishing Co.
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Chapter 5, Problem 2PS
Summary Introduction

To determine: The advantages and the disadvantages of using the data to help the estimation of the expected rate of return.

Introduction:

The estimation and the prediction of the future return are calculated by using the data of past years. This analysis of the past data can be helpful to get the accurate results on the future return of the investments.

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based on the current variables that may impact stock demand, such as inflation, budget deficit, monetary policies, political situations, and investor's sentiment generally. Do you believe that stock prices will grow or drop this year's end based on these conditions? Justify your response using logic. Which of the following factors do you believe will have the greatest influence on stock prices?
Each stock's rate of return in a given year consists of a dividend yield (which might be zero) plus a capital gains yield (which could be positive, negative, or zero). Such returns are calculated for all the stocks in the S&P 500. A weighted average of those returns, using each stock's total market value, is then calculated, and that average return is often used as an indicator of the "return on the market."
Name the econometric term used for estimating the correlation between today’s stock price and the price of previous days (lag prices).
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