Determine the probability for each stock

Assignment Help Accounting Basics
Reference no: EM132103120

Question - Your stockbroker has called has called to tell you about two stocks: Microsoft Corporation. (MSFT) and Oracle Corporation (ORCL). He tells you that Microsoft is selling for $51.00 per share and that he expects the price in one year to be $58.00. Oracle is selling for $41.00 per share and he expects the price in one year to be $44. The expected return on MSFT has a standard deviation of 12 percent, while the expected return on ORCL has a standard deviation of 18%. The market risk premium for the S & P 500 has averaged 5.5 percent.

Required:

Determine the probability for each stock that you would earn more than your required rate of return.

Determine the probability for each stock that you would earn a return that is negative.

Explain why you would or would not buy either or both of the two stocks.

Reference no: EM132103120

Questions Cloud

Classical method purchasing and lean method purchasing : What is the difference between classical method purchasing and lean method purchasing?
How much principal will the company plan to repay : Assuming that Austin Paints has $7,000 in excess cash budgeted for April, how much principal will the company plan to repay
Calculate the minimum cost cycle time in days : MySchool Notebook Company produces custom 3-ring binders with school logos for high schools in the Midwest. Calculate the minimum cost cycle time in days.
Strategies is key aspect of external audit : Develop a Competitive Profile Matrix for Hershey Company Purpose Monitor competitive performances and strategies is a key aspect of an external audit.
Determine the probability for each stock : he market risk premium for the S & P 500 has averaged 5.5 percent. Determine the probability for each stock
Calculate the economic production quantity for mulch : Iron Hill Pallet Company produces hardwood mulch by grinding used pallets. Calculate the economic production quantity for mulch.
What are two major research issues involved in sampling : What common mistakes do people make when they communicate? Discuss what are two major research issues involved in sampling
Prepare a schedule to determine the correct inventory amount : According to its records, the inventory balance at year-end was $796,290. Prepare a schedule to determine the correct inventory amount
Main dashboard structure for new car design : Plainwell Polymers is going to producing the main dashboard structure for a new car design.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd