What is the return variance

Assignment Help Finance Basics
Reference no: EM13280865

You are considering buying a share of stock in a firm that has the following two possible payoffs with the corresponding probability of occurring. The stock has a purchase price of $15.00. You forecast that there is a 30% chance that the stock will sell for $30.00 at the end of one year. The alternative expectation is that there is a 70% chance that the stock will sell for $10.00 at the end of one year. What is the expected percentage return on this stock, and what is the return variance?

Reference no: EM13280865

Questions Cloud

Compute the magnitude of the maximum torque : a bicyclist of mass 54 kg puts all his weight on each downward-moving pedal as he pedals up a steep road. determine the magnitude of the maximum torque he exterts in the process
Design a circuit that implements the function with vhdl code : Use a K-Map to design a circuit that will accept 5-bit input, and output the value left-shifted by 1. For example, if the input is 10101, the output is 01010. Design a circuit that implements this function. Write the VHDL code.
What are the octal values of the four 8-bit bytes : what are the octal values of the four 8-bit bytes in the 32-bit number with octal representation 321076543218
Find the speed of the aircraft with respect to the ground : the velocity of an airplane is 50km/hr due north. the plane the plane flies into a cross wind of 50km/hr due east at a right angle
What is the return variance : The alternative expectation is that there is a 70% chance that the stock will sell for $10.00 at the end of one year. What is the expected percentage return on this stock, and what is the return variance?
What is the monthly annuity payment under this schedule : You will make monthly payments with a 20-year payment schedule. What is the monthly annuity payment under this schedule.
Describe the impact of the solicitation process : Describe the impact of the solicitation process and how it determines the preparation of your bid.
How many homes could this internal energy serve for one day : Compressed air can be pumped underground into huge caverns as a form of energy storage. how many homes could this internal energy serve for one day
Contrast confirmation and attribution bias : Contrast confirmation and attribution bias and indicate how they both work in educational methodologies, giving examples of each.

Reviews

Write a Review

Finance Basics Questions & Answers

  Determination of abnormal return

AT&T announced its intent to acquire TCI. The assets of obtained in the acquisition helped create AT&T Broadband. Three years later, on Monday July 9, 2001,

  What was your effective ear over the holding period

You hold the bond to maturity, but you do not reinvest any of your coupons. What was your effective EAR over the holding period?

  Calculate the returns using capm

Assume the market portfolio has an expected return of 10% and a volatility of 20 percent, while Microsoft's stock has a volatility of 30 percent.

  What profit margin must the firm achieve

McCormac Co. wishes to maintain a growth rate of 9 percent a year, a debt-equity ratio of 0.41, and a dividend payout ratio of 52 percent. The ratio of total assets to sales is constant at 1.21.

  Statement concerning variable costs

Find the correct statement concerning variable costs.

  Optimal debt level-unlevered firm and financial distress

A Corporation is unlevered, zero growth firm with expected EBIT of $4 million and corporate tax rate of 40% Find out the optimal debt level according to MM with corporate taxes (with no financial distress)?

  What is the maximum price he can pay for the car

Matthew wants to take out a loan to buy a car. He calculates that he can make payments of $4000 per year. If he can get a five - year loan with an interest rate of 7.5%, what is the maximum price he can pay for the car?

  Should the company continue to manufacture product a

If it does so, unit sales would remain unchanged and $5of the$9 per unit costs assigned to Product A would be eliminated . Should the company continue to manufacture Product A or purchase Product B for resale?

  Describe dividend decisions

Describe Dividend decisions for the existence of dividend clienteles by measuring the average decline in stock price when the stock goes ex-dividend

  Detailed explanation to annuity

You've the option of extending your annuity another 10 years. If you pay more money today, you can continue to recieve $1,500 per year for another 10 years.

  Define what is jowers cost of capital

If the cost of common equity for the firm is 20.5% , the cost of preferred stock is 11.8% and the before tax cost of debt is 10.1% what is Jowers cost of capital? The firm's tax rate is 34%.

  Computing required rate of return

Tom Busby owes $20,000 now. A lender will carry the debt for four more years at 8 percent interest. That is, in this particular case, the amount owed will go up 8% each year for 4-years.

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