About the industrial production rate and the inflation rate

Assignment Help Financial Management

Reference no: EM13878416

Suppose two factors are identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 5% and IR 6%. A stock with a beta of 1 on IP and 0.5 on IR currently is expected to provide a rate of return of 11%. If industrial production actually grows by 6%, while the inflation rate turns out to be 8%, what will be your expected rate of return on the stock, given the new information about the industrial production rate and the inflation rate? (Enter your answer as a percentage rounded to 1 decimal places.)

Expected rate of return %

Reference no: EM13878416

Questions Cloud

Explain the major theoretical paradigms of sociology : Define the basic concepts used in the discipline of sociology and explain the major theoretical paradigms of sociology.

What concentration of sulfate ion : Given a solution in which [Ba2+]= 0.010 M./ a) What concentration of sulfate ion (SO4--) is required to just begin precipitating BaSO4?

Briefly define reverse leveraged buyouts : Briefly define reverse leveraged buyouts. How have companies that have engaged in reverse LBOs performed relative to their industry peers that have not engaged in such deals? Cite relevant research to support your conclusions.

Natural gas unit was expected to have the energy cost : At NYIT in 1993 a 100ton electric A/C system (electric driven compressor) with a 100 ton natural gas absorption system. Electric then was$. 12/kwh and the natural gas unit was expected to have the energy cost.

About the industrial production rate and the inflation rate : Suppose two factors are identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 5% and IR 6%. A stock with a beta of 1 on IP and 0.5 on IR currently is expected to provide a rate..

Draw the enumeration of your choral molecule : Draw the chiral molecule product from your reaction and label at least one of its chiral centers (R/S). Draw the enantiomer of your chiral molecule.

Determine the required magnitude of force f : In order to pull out the nail at B, the force F exerted on the handle of the hammer must produce a clockwise moment of 500 lb is ?^? in. about point A. Determine the required magnitude of force F.

About the current share price : Estes Park Corp. pays a constant $8.15 dividend on its stock. The company will maintain this dividend for the next 12 years and will then cease paying dividends forever. If the required return on this stock is 11 percent, what is the current share pr..

What is the dollar effect on net income if windbreakers drop : What is the dollar effect on net income if Windbreakers drops the production and sale of Gale and uses the released capacity for Windy?

User Account

All Pages