Question

In: Economics

if the stock price is 100$ and return rate is 15%. then what would be the...

if the stock price is 100$ and return rate is 15%. then what would be the initial price to expected rate of return ratio?

Solutions

Expert Solution

Return rate=15%

Current price=$100

Rate of return=[current price-initial price]/initial price

So 0.15=(100-initial price)/initial price

So initial price=$86.95


Related Solutions

A stock whose price is currently $125.67 that offers a rate of return of 15 percent....
A stock whose price is currently $125.67 that offers a rate of return of 15 percent. The expected return on the market portfolio is 16 percent, and the risk-free rate of return is currently 7 percent. Suppose that expected returns are generated by the CAPM. If the stock's beta increases by 94 percent what will the firm's share price become? (show working)
What will be the nominal rate of return on a perpetual preferred stock with a $100...
What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 8% of par, and a current market price of (a) $56.00, (b) $77.00, (c) $104.00, and (d) $137.00? Round your answers to two decimal places. % % % %
What will be the nominal rate of return on a perpetual preferred stock with a $100...
What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 10% of par, and a current market price of (a) $54.00, (b) $82.00, (c) $101.00, and (d) $148.00? Round your answers to two decimal places. % % % %
Investors require a 15% rate of return on Levine company’s stock (that is, ????= 15%). (1)...
Investors require a 15% rate of return on Levine company’s stock (that is, ????= 15%). (1) What is its value if the previous dividend (??0 ) was $2, and investors expect dividends to grow at a constant rate of (ⅰ) -5%, (ⅱ) 0%, or (ⅲ) 5%? (2) Using data from part (1) (??0=$2), what would the Gordon (constant growth) model value be if the required rate of return was 15% and the expected growth rate was 20%? Is this a...
A stock price is currently $60. Assume that the expected return from the stock is 15%...
A stock price is currently $60. Assume that the expected return from the stock is 15% and its volatility is 25% per annum. What is the probability distribution of the stock price, ST, in six months? Φ ( μ, σ2 ) = Φ ( , ) Calculate a 95% (with 1.96 standard deviation) confidence interval of the stock price, ST, in six months. What is the probability that a six-month European call option on the stock with an exercise price...
You invest $100 in a risky asset with an expected rate of return of 15% and...
You invest $100 in a risky asset with an expected rate of return of 15% and a standard deviation of 15% and a T-bill with a rate of return of 5% and E (U)= E(r) - 0.5Aσ2. Suppose your risk aversion factor is 5. What weight would you assign to the risk-free asset? A) 0.8889. B) 0.1111. C) 0.2457. D) 0.2111.
You invest $100 in a risky asset with an expected rate of return of 15% and...
You invest $100 in a risky asset with an expected rate of return of 15% and a standard deviation of 15% and a T-bill with a rate of return of 5% (and a standard deviation of 0). 6. What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 13%? A) 20% and 80% B) 25% and 75% C) 80% and 20% D) 75% and...
What will be the nominal rate of return on a perpetual preferredstock with a $100...
What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 11% of par, and a current market price of (a) $52, (b) $83, (c) $98, and (d) $144? Round your answers to two decimal places.  %  %  %  %
What will be the nominal rate of return on a perpetual preferredstock with a $100...
What will be the nominal rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 11% of par, and a current market price of (a) $66, (b) $84, (c) $101, and (d) $142? Round your answers to two decimal places.  %  %  %  %
The current spot price of a stock is $33.00, the expected rate of return is 7.2%,...
The current spot price of a stock is $33.00, the expected rate of return is 7.2%, and the volatility of the stock is 20%. The risk-free rate is 3.8%. (a) Find the 90%-confidence interval for the stock price in 6 months. (b) Compute the expected percent change in the stock over the next 6 months.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT