Reference no: EM132005542
Suppose a factor model is appropriate to describe the returns on a stock. The current expected return on the stock is 10.9 percent. Information about those factors is presented in the following chart:
| Factor |
ß |
Expected Value |
Actual Value |
| Growth in GNP |
1.86 |
2.9% |
3.4% |
| Inflation |
-1.40 |
5.1 |
5.6 |
a. What is the systematic risk of the stock return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Systematic risk of the stock return %
b. The firm announced that its market share had unexpectedly increased from 27 percent to 31 percent. Investors know from past experience that the stock return will increase by .85 percent for every 1 percent increase in its market share. What is the unsystematic risk of the stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Unsystematic risk of the stock return %
c. What is the total return on this stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Total return on this stock %
|
Discuss the reasons behind levels of economic development
: Discuss the reasons behind levels of economic development in China varying significantly between coastal areas as compared to more inland areas of China?
|
|
Explain the effects of the situation on the nominal interest
: Using an appropriate diagram, illustrate and explain the effects of this situation on the nominal interest rate in the economy.
|
|
Formation of a hurricane-tornado and thunderstorms
: What are some of the atmospheric conditions that needed for the formation of a hurricane, tornado, and thunderstorms.
|
|
Find the expected share price at the end of 2014
: Suppose the dividends for the Seger Corporation over the past six years were $1.19, $1.27, $1.36, $1.44, $1.54, and $1.59, respectively.
|
|
What is the systematic risk of the stock return
: The firm announced that its market share had unexpectedly increased from 27 percent to 31 percent.
|
|
What apparent long-term effects on the earth
: What apparent long-term effects on the Earth's atmosphere can be attributed to modern technology?
|
|
What are the different carbons
: What are the different carbons and what are the 7 ways the ocean will be affected by climate change?
|
|
Under what circumstances will the option be exercised
: Draw a diagram illustrating how the profit for the holder of the option, from a long position in the option, depends on the stock price at maturity .
|
|
Describe the geologic processes that lead to the formation
: QUESTION 1: Describe the geologic processes that lead to the formation of High Islands, Barrier Reefs and, Atolls.
|