Portfolio analyst wants to include one of his stocks

Assignment Help Financial Management
Reference no: EM131556038

A portfolio analyst wants to include one of his stocks, x,y into his portfolio. If next years inflation is less than 2%, stock x return is 20%, stock y return is 15%. If next years inflation rate is greater than or equal to 2%, stock x return is -30%, and stock y return is -20%. His forecast is that inflation is less than 2% with 80% probability. Which stock should he choose?

Reference no: EM131556038

Questions Cloud

What is the break-even quantity and cost : What is the break-even quantity and cost?
Long forward contract on non-dividend-paying stock : A long forward contract on a non-dividend-paying stock was entered into some time ago. Calculate the value of the forward contract?
Value of your equity position after stock dividend is paid : What will be the total value of your equity position after the stock dividend is paid?
The assets of firm follow two-state binomial model : Suppose that the assets of a firm follow a two-state binomial model and are currently market valued at 100mil.
Portfolio analyst wants to include one of his stocks : A portfolio analyst wants to include one of his stocks, x,y into his portfolio. His forecast is that inflation is less than 2% with 80% probability.
What is holding period yield : If the bond's holder reinvested the call price at 6 percent for 9 years, what is his 20-year holding period yield?
What is current value of share of lazy days fishing supplies : Lazy Days Fishing Supplies is predicting dividends of $4.00 and $5.00 in the next two years. What is the current value of share of Lazy Days Fishing Supplies?
Unfunded non qualified deferred compensation plan : Which of the following characteristics of an unfunded non qualified deferred compensation plan?
What is the ratio of price to expected earnings : What is the ratio of price to expected earnings for River Cruises before it borrows the $130,000? What is the ratio after it borrows?

Reviews

Write a Review

Financial Management Questions & Answers

  Bond years to maturity yield to maturity

Consider the following $1,000 par value zero-coupon bonds: Bond Years to Maturity Yield to Maturity

  Additional non-constant growth stock problem

what is the intrinsic value (current price per share) of Thai One On's stock? Hint: Follow the three steps.

  Expected to grow at rate-what is current share price

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 26 percent for the next three years, with the growth rate falling off to a constant 6 percent thereafter. If the required return is 12 percent, and the company just paid a di..

  Determine how many units of subassembly

Assume that you are the manager of Assembly, Inc. You have just received an order for 40 units of an industrial robot, which is to be delivered at the start of week 7 of your schedule. Using the following information, determine how many units of suba..

  Affect the effectiveness of voluntary cooperative methods

What are the characteristics of the Lindahl Equilibrium for cooperative supply of a pure public good? How does the free-rider problem affect the effectiveness of voluntary cooperative methods in achieving efficient levels of output for pure public go..

  Find the amount of interest in the tenth coupon payment

Find the amount for accumulation of discount in the tenth coupon. Find the amount of interest in the tenth coupon payment.

  Unless paid by medicare or the beneficiary

Calculate the following amounts for a couple who bills Medicare: Posted charge (based on the regular price of the provider by the query) is $ 75 Program Medicare physician fees (PFS) is $ 60 Coinsurance (paid by the patient or supplemental insurance)..

  What is annualized holding period return

John purchased 100 shares of Black Forest Inc. stock at a price of $153.96 three months ago. He sold all stocks today for $157.67. During this period the stock paid dividends of $5.04 per share. What is John’s annualized holding period return (annual..

  After tax cash flow from the sale of this asset

Consider an asset that costs $369,600 and is depreciated straight-line to zero over its 7-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $46,200. If the relevant tax rate is 32 percent..

  The maintenance expenses on a rental house

The maintenance expenses on a rental house you own average $200 a month. The house cost $219,000 when you purchased it four years ago. A recent appraisal on the house valued it at $239,000. If you sell the house you will incur $14,000 in real estate ..

  What is the price per share of rite bite stock

Rite Bite Enterprises sells toothpicks. Gross revenues last year were $8.0 million, and total costs were $3.9 million. Rite Bite has 1.2 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 4 percent per year. ..

  Price of the bond using duration approximation

Calculate the duration of a 4-year, 4 percent coupon bond with a face value of $1000. Assume that the yield on this bond is 5 percent.  If the interest rates decrease 10 basis points, what would be the approximate change in the price of the bond usin..

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