Guess for rate of return on the stock

Assignment Help Financial Management
Reference no: EM131348534

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 3% and IR 7%. A stock with a beta of 1 on IP and 0.4 on IR currently is expected to provide a rate of return of 12%. If industrial production actually grows by 4%, while the inflation rate turns out to be 8%, what is your best guess for the rate of return on the stock? (Round your answer to 1 decimal place.)

Reference no: EM131348534

Questions Cloud

Effect of an increased demand for milk : a) Show the effect of an increased demand for milk, both in the short run and in the long run. b) How would your answer change if the government had required all dairy farmers to be licensed, and had only issued 1000 licenses?
Managerial economics and globalization : Propose two (2) applications of the knowledge that you have learned in this course to your current or a future position. Provide a rationale for your response. Create a list of three (3) best practices to follow in the field of managerial economic..
How does his or her religion treat women : How does his/her religion treat women? Is there any emphasis on environmental problems? How does his/her religion see other faiths? What kind of rituals does s/he practice? How do his/her beliefs affect her moral life?
Determine the thermal efficiency of the bottoming cycle : Determine the thermal efficiency of the bottoming cycle.- The ratio of the pump to turbine power.- The required mass flow rate of refrigerant.
Guess for rate of return on the stock : 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 3% and IR 7%. If industrial production actually grows by 4%, while the inflation rate turns out to..
Level of federal involvement in healthcare : You work for a freshman congressman who is trying to learn the level of federal involvement in healthcare. He understands that the federal government pays for healthcare, but he is unclear on programs and funding amounts.
Considering the acquisition of new processor : The X company is considering the acquisition of a new processor that has an estimated installed cost of $57,000. The processor has an expected life of 5 years and will be depreciated over a 5 year ACRS life to a zero salvage value. Evaluate the purch..
Suggest about the issue of long-term unemployment : Use an FDL model of order 6 to re-estimate your model from part A, again interpreting your results and commenting on the statistical significance.  What, if anything, do your results suggest about the issue of long-term unemployment?
Calculate the otto asc thermal efficiency : Develop a computer program or use a spreadsheet or equation solver to calculate the Otto ASC thermal efficiency as the compression ratio ranges from 1.00 to 12.0 for the given values of k.

Reviews

Write a Review

 

Financial Management Questions & Answers

  Calculate the selling price for each of the bonds

Mark Goldsmith’s broker has shown him two bonds. Each has a maturity of 5 years, a par value of $1,000, and a yield to maturity of 12%. Bond A has a coupon interest rate of 6% paid annually. Bond B has a coupon interest rate of 14% paid annually. Cal..

  Briefly discuss the difference in the results for two index

You are given the following information regarding prices for a sample of stocks. Construct a price-weighted index for these three stocks, and compute the percentage change in the index for the period from T to T + 1. Briefly discuss the difference in..

  The risk premium on spanish government bonds

In May of 2014 Standard and Poor's upgraded the ratings for Spanish government debt from BBB- to BBB. What should this do to the risk premium on Spanish government bonds?

  Determine the mean and standard deviation of the random

Let xÌ... denote the mean age of a random sample of n = 50 students. Determine the mean and standard deviation of the random variable xÌ....

  Merger valuation

Harrison Corporation is interested in acquiring Van Buren Corporation. Assume that the risk-free rate of interest is 3% and the market risk premium is 7%. Harrison estimates that if it acquires Van Buren, the year-end dividend will remain at $2.05 a ..

  Calculate the proposed projects internal rate of return

FINANCIAL MANAGEMENT (FIN202) - Calculate the proposed project's internal rate of return (IRR). Explain the rationale for using the IRR to evaluate capital investment projects. Could the IRR for this project be different for SRC than for another c..

  Initial fixed asset investment and quantity sold

Consider a three-year project with the following information: initial fixed asset investment = $710,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $34.75; variable costs = $22.90; fixed costs = $213,500; ..

  Determine the addition to retained earnings

Balance Sheet as of December 31, 2013 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit 0 Total current assets $16,560 Notes payable 2,100 Net fixed assets 12,600. Use the f..

  What is the crossover rate between project

What is the crossover rate between Project A and Project B given the following cash flows:

  Steak dinners will be produced and sold

Bubba's Steakhouse has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,690; depreciation, $740; and other fixed costs, $430. Each st..

  Positive earnings but retained earnings deficit at any point

Please give the full name two companies that have had positive earnings but a retained earnings deficit at any point in their history. I'm specifically looking for a company that is paying out a lot of dividends and/or repurchasing their stock.

  About the annual percentage rate

Sean purchased 100 shares of Toyota stock at a price of $151.68 three months ago. He sold all stocks today for $155.15. During the period in question, the stock paid dividends of $5.18 per share. What is Sean's annualized holding period return (annua..

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