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
Agency Mortgage-Backed Securities (AMBS) are securities that are backed by the mortgage loans. These securities include mortgage passthrough securities, stripped

Q. Cost of Equity Share Capital? Cost of Equity Share Capital: - The cost of equity is the utmost rate of return that the company should earn on equity financed position of its

Significant Performance Indicators   Following are the most commonly used performance indicators used to assess the financial, and general health of any company:   Gro

How competitive is the market for banking services? A: With above 7,000 banks and thrifts in the U.S., banking is one of the so many competitive industries in the world. Refer

What problems can take place into the capital budgeting analysis if project debt is evaluated in place of the borrowing capacity created by the project? If project debt is grea

Payback Period It is an amount of time, mainly measured in years; it takes previously the undiscounted cash inflows from a project equal the cash outflow. It indicates the leng

Return Enhancement can be explained using following heads: Use of a Valuation Model: An investor having access to a bond valuation model can bu

this case has been framed in order to test the skills

Q. Define the Cash Budget? Cash Budget: - A cash budget is an estimation of cash receipts and cash payments for a future period of time. It is prepared to predict the cash requ

A Swiss Variable Rate Mortgage (SVRM) is a version of ARM which carries a coupon rate that a bank can change any time giving a notice of three m