3. A stock produced returns of 4.6 percent, 11.9 percent, -23.2 percent, 0.9 percent, and 16.7...

3. A stock produced returns of 4.6 percent, 11.9 percent, -23.2 percent, 0.9 percent, and 16.7 percent over the past five years. What is the geometric average return on this stock for this time period? a. 11.17 percent b. 1.14 percent c. 0.74 percent d. 1.43 percent e. 5.28 percent

4. A stock had an average return of 13.7 percent compared to an average return on U.S. Treasury bills of 3.8 percent for the same time period. What is the equity risk premium on this stock? a. 17.50 percent b. 13.70 percent c. 3.61 percent d. 9.90 percent e. 7.73 percent

6. Bugatti, Inc is expected to pay a dividend of $2.40 next year and its current stock price is $48. The discount rate for the company is 11%. If the market expects Bugatti’s dividends to grow at a constant rate forever, then the growth rate must be _____% a. 5 b. 6 c. 7 d. 8 e. 9 16.

16. What is the current price of a share of stock that is expected to pay a dividend (i.e., D1) of $4.10 per share exactly one year from today, if the expected growth rate in the company’s earnings and dividends is expected to be 4.6% per year forever and the required rate of return for the stock is 16%?

17. What is the required rate of return (assuming equilibrium) of a share of stock that just paid a dividend (i.e., D0) of $0.75 per share, assuming that all future dividends are expected to grow at a rate of 4.2 percent per year forever? The stock currently sells for $24.18 per share.

18. What is the constant growth rate in the dividends (forever) of a share of stock that currently sells for $230.44, if the dividend just paid (i.e., D0) equals $22.10 and the required rate of return for the stock is 18.8%?

Solutions

Expert Solution

jeff jeffy answered 1 month ago

Next > < Previous

Related Solutions

A stock produced returns of 14 percent, 17 percent, and −1 percent over three of the...

A stock produced returns of 14 percent, 17 percent, and −1 percent over three of the past four years, respectively. The arithmetic average for the past four years is 6 percent. Show your work here (please be as detailed and organized as possible): What is the missing return (i.e., the return in the fourth year)? What is the geometric average return over the four years? What is the standard deviation of returns of the stock? (Show work below please).

Over the past four years, a stock produced returns of 14 percent, 22 percent, 6 percent,...

Over the past four years, a stock produced returns of 14 percent, 22 percent, 6 percent, and -19 percent. What is the approximate probability that an investor in this stock will not lose more than 30 percent nor earn more than 41 percent in any one given year? How would you calculate this in excel?

A stock had returns of 6 percent, 39 percent, and -3 percent over the past 3...

A stock had returns of 6 percent, 39 percent, and -3 percent over the past 3 years. What is the mean of the stock’s returns over the past 3 years minus the sample standard deviation of the stock’s returns from the past 3 years? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

. Over the past five years, a stock produced returns of 10 percent, 18 percent, 2...

. Over the past five years, a stock produced returns of 10 percent, 18 percent, 2 percent, -9 percent, and 4 percent. a) What is the geometric return? b) What is the arithmetic return? c) What is the variance of the above returns? d) What is the sample standard deviation?

A stock had returns of 8 percent, –8 percent, 3 percent, and 14 percent over the...

A stock had returns of 8 percent, –8 percent, 3 percent, and 14 percent over the past 4 years. What is the standard deviation of this stock for the past four years? Multiple choice 16.1 percent 4.7 percent 9.3 percent 4.3 percent

Over the past four years, a stock produced returns of 13, 6, -5, and 18 percent,...

Over the past four years, a stock produced returns of 13, 6, -5, and 18 percent, respectively. What is the standard deviation of these returns? What would be the standard deviation of these returns if they were exactly twice the return shown for each year? please show your work.

The risk-free rate is 4.6 percent. Stock A has a beta = 1.2 and Stock B has...

The risk-free rate is 4.6 percent. Stock A has a beta = 1.2 and Stock B has a beta = 1. Stock A has a required return of 12.1 percent. What is Stock B’s required return? Group of answer choices 11.05% 10.85% 10.95% 11.15% 11.25% You observe the following yield curve for Treasury securities: Maturity Yield 1 Year 3.20% 2 Years 4.40% 3 Years 5.20% 4 Years 5.40% 5 Years 7.40% Assume that the pure expectations hypothesis holds. What does the market expect will be the yield on 3-year securities,...

A stock has a beta of 0.9 and an expected return of 9 percent. A risk-free...

A stock has a beta of 0.9 and an expected return of 9 percent. A risk-free asset currently earns 4 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If a portfolio of the two assets has a beta of 0.5, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers...

A stock had returns of 10 percent, -4 percent, 4 percent, and 18 percent over the...

A stock had returns of 10 percent, -4 percent, 4 percent, and 18 percent over the past four years. What is the standard deviation of these returns?

A stock had returns of 5 percent, 9 percent, 11 percent, −8 percent, and 6 percent...

A stock had returns of 5 percent, 9 percent, 11 percent, −8 percent, and 6 percent over the past five years. What is the standard deviation of these returns? Multiple Choice 11.14 percent 7.44 percent 8.44 percent 4.60 percent 5.97 percent

Subjects