What is expected risk premium for this stock next year

Assignment Help Financial Management
Reference no: EM131931203

After some study of the economy, your forecast for next year is that a boom economy has a 30% chance of occurring, a neutral economy 50%, and a bust economy a 20% chance of occurring. You also estimate that a certain stock would have a return of 33% in a boom economy next year, 21% in a neutral economy , and -11% in a bust economy. The risk-free rate is 4.5%. What is the expected risk premium for this stock next year? (Answer to the nearest tenth of a percent, but do not use a percent sign).

Probability

Return

Boom Economy

30%

33%

Neutral Economy

50%

21%

Bust Economy

20%

-11%

Risk-Free Rate = 4.5%

Reference no: EM131931203

Questions Cloud

Fence around yard to confine : Stan's dog is causing the damage, so if the social optimum is to be achieved, the only solution is to have Stan pay to put up a fence around
Calculate the average product of labor : Calculate the Average Product of Labor for L=1 to L=10.
Calculate the npv for both projects : Calculate the NPV for both projects if the discount rate is 11%.
What is the firm total product of labor equation : What is the firm's total product of labor equation? Calculate the Total Product of Labor for L=1 to L=10.
What is expected risk premium for this stock next year : The risk-free rate is 4.5%. What is the expected risk premium for this stock next year?
Analyze the ethical and legal considerations of the policy : Explain the tension between individual rights and the collective good. Analyze the ethical and legal considerations of the policy.
Advice on making wise decisions : It is almost impossible to survive without some type of credit card? Does anyone have advice on making wise decisions when choosing a credit card?
What is the expected return for stock next year : The risk-free rate is 4.6%. What is the expected return for this stock next year?
Discuss the financial aspects of sustainability : Find news stories about companies that relate to financial aspects of sustainability. This can include stories about how firms measure sustainability.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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