Estimate the most systematic risk, Financial Management

Yang Su is considering the following information on two stocks:

                                                                             Rate of Return

State of Economy     Probability       Catherine Lam Inc.(A)     David So Ltd(B)

Recession                    0.30                     0.08                                  -0.20

Normal                        0.50                     0.40                                    0.15

Boom                          0.20                     0.20                                    0.42

The market risk premium is 8% and the risk free rate is 6%. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which stock is riskier? Explain

 

Posted Date: 4/5/2013 5:51:34 AM | Location : United States







Related Discussions:- Estimate the most systematic risk, Assignment Help, Ask Question on Estimate the most systematic risk, Get Answer, Expert's Help, Estimate the most systematic risk Discussions

Write discussion on Estimate the most systematic risk
Your posts are moderated
Related Questions
Have the large bank holding companies increased their market share at the expense of smaller institutions? A: No. A study conducted by the Federal Reserve Bank of New York reve

The management of Border Bank has asked you to help with it with its market risk calculations. It has compiled the following data on its financial assets: • $500 million of amorti

What is risk free rate of return There is a 'risk free rate of return' (also known as time preference rate) which is used to compensate for the loss of not being able to invest

These securities aid in unpacking the cash flows from a pass-through. The most uncomplicated stripped mortgage-backed securities are the PO-IO-security. Unlike a

Peak Inc. needs to order Canadian raw materials to use in its production process. The Canadian exporter typically invoices Peak in Canadian dollars. Assume that the current exchang

Q. What is Adjusted Gross Income? Adjusted Gross Income - Gross income decreased by business and other specified expenses ofindividual taxpayers. Amount of adjusted gross incom

Q. What do you mean by Sarbanes-Oxley? Sarbanes-Oxley (SOX) - Sarbanes-Oxley Act was signed into law on 30 July 2002 by President Bush. Act is designed to oversee the financial

What is the primary assumption behind the experience approach to forecasting? The experience act to forecasting is based on the assumption that things will happen a certain way

These are bonds which are offered within the euro market and several other markets simultaneously. Unlike Eurobonds, global bonds can be issued in the same curren

what is operating lease, its features, advantages, its applicability