Reference no: EM132047177
a) There is a 45% probability of a below average economy and a 55% probability of an average economy. If there is a below average economy stocks A and B will have returns of 6% and -3%, respectively. If there is an average economy stocks A and B will have returns of 17% and 17%, respectively. Calculate the expected returns and standard deviations of stocks A and B.
b) There is a 40% probability of an average economy and a 60% probability of an above average economy. You invest 42% of your money in Stock S and 58% of your money in Stock T. In an average economy the expected returns for Stock S and Stock T are 12% and 8%, respectively. In an above average economy the the expected returns for Stock S and T are 12% and 10%, respectively. What is the expected return for this two stock portfolio?
c) You are invested 14% in growth stocks with a beta of 1.9, 14% in value stocks with a beta of 1, and 72% in the market portfolio. What is the beta of your portfolio?
d) A banker gathered the following information for a stock and market parameters: stock beta = 0.5 expected return on the Market = 14.8%; expected return on T-bills = 6.3%; current stock Price = $8.51; expected stock price in one year = $13.37; expected dividend payment next year = $1.14. Calculate the required return and expected return for this stock.
e) The expected return for the market next period is 5.4% and the risk-free rate is 3%. Stock Z has a beta of 1 and an expected return of 10.1%. What is the reward-to-risk ratio for the market portfolio and Stock Z.
Please show work and thank you for the help!
|
Net present value of loan excluding flotation costs
: Calculate the net present value of the loan excluding flotation costs. Calculate the net present value of the loan including flotation costs.
|
|
What is the company total book value of debt
: What is the company’s total book value of debt? What is the company’s total market value of debt?
|
|
How many bonds should they sell to raise the debt
: Yield to maturity for similar bond is 7%. The enterprise expect to raise $35 million so how many bonds should they sell to raise the debt?
|
|
Calculate the predicted change to equity
: If all interest rates decrease 50 basis points, how will this impact equity? Calculate the predicted change to equity.
|
|
What is the reward-to-risk ratio for market portfolio stock
: The expected return for the market next period is 5.4% and the risk-free rate is 3%. What is the reward-to-risk ratio for the market portfolio and Stock Z.
|
|
How to use stock volatility to value call option
: How to use stock volatility to value a call option using the risk neutral method with a binomial tree over 3 periods?
|
|
How may it potentially affect organizations
: How may this stereotype-perpetuated by pop culture-lead to discrimination? How may it potentially affect organizations? 200 word minimum.
|
|
Describe how environmental stressors can aggravate illness
: Describe how environmental stressors, such as poverty, can aggravate mental illness and make treatment more challenging.
|
|
Describe a global business decision a company could make
: Select 3 countries from the following list: Sweden, Bahrain, Germany, Singapore, New Zealand, China, Australia, Switzerland, Canada, and the Netherlands.
|