The expected return for investment alpha

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Reference no: EM131528028

Peter owns investment alpha and 1 share of stock bravo. The total value of his holdings is $200. Stock Bravo is expected to be priced at $40 in 5 years, is expected to pay dividends of $2.50 in 1 year and $3.50 in 2 years, and has an annual expected return of 11 percent. Investment Alpha has an expected return of X and is expected to pay $31 per year for a finite number of years such that its first annual payment is expected in 1 year from today and its last annual payment is expected in 9 years from today. What is X, the expected return for investment Alpha?

Reference no: EM131528028

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