Calculate the expected return on stock: State of the economy Probability of the state Percentage returns on stock Economic recession 25% -8.5% Boom 12% 15.6% Steady economic growth 63% 3.4% Round the answers to two decimal places in percentage form.
Q: Cornwell Industries stock has a beta of 1.10. The company just paid a dividend of $2.16, and the…
A: a) As per Dividend Growth Model, Ke = (D1/P0) + g WhereP0 = Current Stock price i.e. $72 D1 =…
Q: Calculate the average stock return from 2005–2007, the standard deviation and coefficient of…
A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…
Q: Return if State Occurs Probability of State State of Economy Stock A Stock B Bust .10 -.12 -.05…
A: The table is: State of economy Probability of state Stock A Stock B Bust 0.1 -0.12 -0.05…
Q: Calculating key stock performance metrics The Castle Company recently repted net profits after taxes…
A: Given, Net profits after taxes = $18.10 million No. of Shares = 2 million Preferred dividend = $ 1…
Q: Value a Constant Growth Stock Financial analysts forecast Wal-Mart Stores (WMT) growth for the…
A: Required Return = 14.00%Growth Rate = 11.00%Recent Dividend = 1.33
Q: (a) An all equity firm has the following expectations about earnings this year. State Recession…
A: EPS or Earnings-per-share refers amount of total net earnings of an entity that belongs to each…
Q: A company expects EPS to be $8.81 next year. The industry average P/E ratio is 34.84 and Enterprise…
A: The method of comparables means the relevant ratios of industry, peer groups or similar kind of…
Q: Probability of Rate of Return if State Occurs State of Economy 21 61 Economy Recession Stock A Stock…
A:
Q: 10: Beasley Enterprises stock has an expected return of 8.86 percent. The stock is expected to…
A: The expected rate of return is the overall rate of return that a company provides in a neutral…
Q: Beta of common stock = 1.2 Treasury bill rate = 4% Market risk premium = 6.5% Yield to maturity on…
A: As per CAPM, cost of equity =Risk free rate + beta * market risk premium = 4% + 1.20 * 6.5% = 4% +…
Q: What is the expected return for Big Tech Co. Stock given the following information? 3. Stock…
A: Expected return can be defined as the return which an investor expects to be generate on a project…
Q: The investor’s required rate of return is 15 percent. • The expected level of earnings at the end of…
A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…
Q: SCHOOL OF BUSINESS ADMINISTRATION Corporate Financial Management FINC 401 Answer the following…
A: Hi! Thank you for the question, As per the honor code, we are allowed to answer one question at a…
Q: (Common stock valuation) Assume the following: • the investor's required rate of return is 16…
A: Growth rate = retention ratio * ROE
Q: Metatrend’s stock will generate earnings of $2 per share this year. The discount rate for the stock…
A: Given information: Earnings per share is $2 Discount rate is 10% Rate of return on invested earnings…
Q: Stock ABC is currently sold at a price RM4.50 per unit. The dividend of 7 cent per share was…
A: Nominal rate of return: Nominal interest rates include the inflation effect. Nominal interest rate…
Q: Compute the Expected Rate of Return of a stock that is listed in the country's stock exchange and…
A: Using CAPM method calculate the expected rate of return. Expecting rate of return indicate the…
Q: Suppose your company uses a 2-factor macroeconomic factor model to evaluate stocks and has derived…
A: According to the macroeconomic model, the returns on asset are explained by the surprises in the…
Q: Stock A has the following returns for various states of the economy: State of the Economy…
A: Expected Return = Sum of All probability*return
Q: A stock just paid an annual dividend of $7.75 per share. The expected growth rate of the dividend is…
A: Growth rate = 0.1012 or 10.12% Required rate of return = 0.1197 or 11.97% Dividend yield = ?…
Q: You have found the following historical information for DEF Company: Year 2 Year 3 Year 4 Year1…
A: First, PE ratio for each year is calculated as Price divided by earnings. Then the average of 4 year…
Q: Suppose that a company's most recent dividends per share paid upon the last year's net income was…
A: The question is related to Dividend Policy.The company's most recent dividends per share paid upon…
Q: (Valuing common Stock) Assume the following: • The investor’s required rate of return is 15 percent.…
A: Price earning ratio is no. of times a company's share is trading compared to its earning per share.
Q: (Common stock valuation) Wayne, Inc.'s outstanding common stock is currently selling in the market…
A: Gordon's model refers to the model which suggests that the dividend policy is relevant and can…
Q: Stock ABS has a dividend yield of 1.5 percent. Last year, the stock price fell from P65 to P60. What…
A: The stock price is the price or value that is given for each unit of share that is issued by a…
Q: (Related to Checkpoint 10.1) (Common stock valuation) Header Motor, Inc., paid a $2.81 dividend last…
A: Last dividend (D0) = $ 2.81 Growth rate (g) = 5% Required rate of return (r) = 10%
Q: Forecasted returns for Stock A: State…
A: Expected Return is calculated as: ER = ∑i =1nRiPi where, R = return in scenario i P = probability…
Q: Financial analysts forecast Safeco Corp.’s (SAF) growth rate for the future to be 8 percent.…
A: Growth rate (g) = 0.08 Last dividend (D0) = $1.25 Required return (r) = 0.10 Value of the stock (P0)…
Q: (Valuing common Stock) Assume the following: • The investor’s required rate of return is 15 percent.…
A: The price-to-earnings ratio is a valuation metric that compares a company's current share price to…
Q: Abilene Industries has a book value per share of $70 on January 1, X1. The predicted earnings per…
A: Introduction Predicted Earnings: The abnormal earnings valuation method includes both a company's…
Q: Calculating key stock performance metrics The Castle Company recently reported net profits after…
A: Computation of Earning Per Share(EPS): EPS=Net Profit after tax-Preferred dividendsNumber of…
Q: Gee-Gee common stock returned a nifty 21.77 percent rate of return last year. The dividend amount…
A: Rate of price appreciation will be the difference between market return by stock and dividend yield…
Q: C.) Given the possible returns (dividend plus capital gains) over the coming year from a $10,000…
A: 16-20) probability RETURN RETURN % (RETURN/10,000) Return% x PROBABILITY RECESSION 0.2…
Q: Header Motor, Inc., paid a $2.83 dividend last year. At a constant growth rate of 3 percent, what…
A: Dividend discount model will be used here. As per the dividend discount model the value of a stock…
Q: ou buy a share of The Ludwig Corporation stock for $23.70. You expect it to pay dividends of $1.10,…
A: Value of stock can be found out from the dividend discount model assuming constant growth of…
Q: Calculate the following for the Current Year based on the information above. (Round percent to one…
A: Calculation of ROA , ROE, EFFECT OF LEVERAGE, EPS AND P/E RATIO are as follows.
Q: Financial analysts forecast Wal-Mart Stores (WMT) growth for the future to be 12.00 percent. Their…
A: Calculation of Value of Stock:The value of stock is $43.23.Excel Spreadsheet:
Q: 19. Given the information on Quatro Common stock. The stock currently sells for $41 per share. Given…
A: Total Return= Closing Price - Current Price + Dividend Return Percentage = 100* Total Return/Current…
Q: Epley Industries stock has a beta of 1.25. The company just paid a dividend of $.40, and the…
A: Discounted cash flows is defined as the valuation method, which used to get calculate the investment…
Q: what is the value of the common stock if the investors require a 15 percent rate of return?
A: Value of Common Stock: The value of the common stock is primarily derived from the current value to…
Q: A stock just paid an annual dividend of $1.81 per share. The expected growth rate of the dividend is…
A: Just paid dividend = $1.81 Annual growth rate = 5.02% Required rate of return = 10.7%
Q: Current price of Company X's stock is $100. The table below gives the data on end of the year prices…
A: current stock price $100
Q: You are planning to invest in a share. There are four possible returns from the share over the next…
A: Expected return = sum total of Probbaility * return
Q: Given the following possible returns (dividends plus capital gains) over the coming year from…
A: The expected return is calculated as the expected profitability across each state of economy divided…
Calculate the expected return on stock:
| State of the economy | Probability of the state | Percentage returns on stock |
| Economic recession | 25% | -8.5% |
| Boom | 12% | 15.6% |
| Steady |
63% | 3.4% |
Round the answers to two decimal places in percentage form.
Step by step
Solved in 4 steps with 2 images
- Given the following information, what is the standard deviation (in percent) of the returns on this stock? Carry intermediate calculations to at least five decimals. Answer to two decimals Probability of State State of Economy Rate of Return (%) of Economy Recession 15% -12.34 Normal 60% 14.14 Boom 25% 23.77Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) State of Economy Probability ofState of Economy Security Returnif State Occurs Recession 0.40 −4.50 % Normal 0.50 13.00 Boom 0.10 25.00Calculate the correlation coefficient (PAB) for the following situation: (Round intermediate calculations and the final answer to 4 decimal place, e.g. 0.2921.) State of the economy High growth Moderate Recession Probability of occurrence 25% 20% 55% Correlation coefficient Expected return on stock A in this state 44.0% 23.0% -11.0% Expected return on stock B in this state 61.0% 31.0% -21.0%
- Based on the following information, calculate the expected return of Stock A: State of the Economy Probability of State Occurring Stock A Expected Return Recession 13. 0.20 0.052 Normal 0.50 0.080 Boom 0.30 0.139 Enter your answer as a decimal with a leading zero and 4 places of precision (i.e. 0.1234)Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Probability of State of Security Return if State Occurs State of Economy Economy 0.40 Recession Normal -5.50% 11.00 0.40 0.20 Вoom 17.00View Policies Current Attempt in Progress Calculate the correlation coefficient (PA) for the following situation: (Round intermediate calculations and the final answer to 4 decimal place, e.g. 0.2921.) State of the economy High growth Moderate Recession Probability of Expected return on occurrence stock A in this state 47.0% 26.0% -14.0% 25% 20% 55% Correlation coefficient Expected return on stock B in this state 64.0% 34.0% -24.0%
- Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. State of Economy Recession Normal Boom Standard deviation Probability of State of Economy 0.60 0.25 0.15 4.42% Security Return if State Occurs -5.00% 13.00 17.00Consider the following information: Rate of return State of Economy Probability Stock A Stock B Recession 0.30 -40% 6% Normal 0.50 18% 4% Воom 0.20 142% 2% [Note: take full decimal places in the middle steps and round your FINAL answer to 2 decimal places (i.e. S1.23 or 1.23%)] (a) Calculate the expected return for the two Stocks A and B respectively. (in %) (b) Calculate the standard deviation for the two Stocks A and B respectively. (in %) (c) If you have $2 million to invest in a stock portfolio and your goal is to create a portfolio with an expected return of 16.92%, how much money will you invest in Stock A and Stock B respectively? (d) Based on your answer in part (c), calculate the standard deviation for the portfolio. (in %) (e) If enough stocks (i.e. 100 randomly selected stocks) had been included in the portfolio, what happen to the standard deviation for the portfolio? Explain. [within 100 words]Covariance and Correlation The following table shows the expected returns from six different stocks in three different states of the economy: State of Economy Probability Return Stock A Return Stock B Return Stock C Return Stock D Return Stock E Return Stock F Growth 0.25 31% 3% 15% 21% 0% 18% Status Quo 0.50 21% 1% 3% 7% 4% 3% Recession 0.25 20% 4% -5% -6% 6% -4% Calculate the expected return for each stock. Calculate the standard deviation for each stock. Consider of a portfolio consisting of 50% in Stock A and 50% in Stock B. Calculate the covariance between Stocks A and B. Calculate the expected return of the portfolio. Calculate the standard deviation of the portfolio. Consider of a portfolio consisting of 50% in Stock C and 50% in Stock D. Calculate the covariance between Stocks C and D. Calculate the expected return of the portfolio. Calculate the standard deviation of the portfolio.…
- Use the following information on states of the economy and stock returns to calculate the expected return for Dingaling Telephone: (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) State of Economy Probability ofState of Economy Security Returnif State Occurs Recession 0.30 -6.5 % Normal 0.55 9.0 Boom 0.15 16.6Consider the following information: Rate of Return If State Occurs State of Probability of State of Economy Economy Stock A Stock B Recession .22 .07 -22 Normal .52 .10 .07 Boom .26 .15 .24 a. Calculate the expected return for Stocks A and B. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)Covariance and Correlation The following table shows the expected returns from six different stocks in three different states of the economy: State of Economy Probability Return Stock A Return Stock B Return Stock C Return Stock D Return Stock E Return Stock F Growth 0.25 31% 3% 15% 21% 0% 18% Status Quo 0.50 21% 1% 3% 7% 4% 3% Recession 0.25 20% 4% -5% -6% 6% -4% Consider of a portfolio consisting of 50% in Stock E and 50% in Stock F. Calculate the covariance between Stocks E and F. Calculate the expected return of the portfolio. Calculate the standard deviation of the portfolio.
