Apple recently had a stock split, so I decided to buy a few shares of Apple...

Apple recently had a stock split, so I decided to buy a few shares of Apple stock. As of today, Apple's beta is 1.28, the treasury yield is around 1.42%, and the market risk premium is 5.6% (Rudden, 2020). What is my expected return on Apple stock? Please explain your work.

Economic State	Probability	Sony	McDonald's
Recession	50%	5%	6.00%
Normal	30%	7.69%	5.28%
Expansion	20%	15%	5.80%

Expert Solution

Risk free rate	1.42%
Market risk premium	5.60%
Beta	1.28

Expected return=	Risk free rate + Beta * Market risk premium
Expected return=	1.42%+1.28*5.6%
Expected return=	8.59%

If the investor does not want to take any risk then treasury yield is the apt return without any risk.
Beta signifies the relative risk in a particular stock. If the investor choose to have some risk in their
portfolio, then they will also some extra return. This return is directly proportionate to the Risk weightage.
Accordingly, Market risk premium adjusted with Beta is added to the risk free rate to come to expected
return of any particular stock. So the expected return from Apple stock is 8.59%.

jeff jeffy answered 2 years ago

Apple has recently split its stock on a 4-for-1 basis. After this transaction, which of the...

Apple has recently split its stock on a 4-for-1 basis. After this transaction, which of the following did really happened: * Number of outstanding shares changed Total share holder's equity changed Apple's balance sheet total changed This transaction required a journal entry

2. When Apple introduced its first iPhone, it had few competitors and so it set a...

2. When Apple introduced its first iPhone, it had few competitors and so it set a price of $500 when its unit cost was $350. The economics consulting firm it hired to estimate the demand elasticity confirmed this was the optimal price. Since then, entry into the mobile market has occurred that make customers more price conscious. When it brought the economics consulting firm back to estimate the demand price elasticity, it found that demand had become more price elastic...

A corporation, which had 33,300 shares of common stock outstanding, declared a 3-for-1 stock split. a....

A corporation, which had 33,300 shares of common stock outstanding, declared a 3-for-1 stock split. a. What will be the number of shares outstanding after the split? shares b. If the common stock had a market price of $78 per share before the stock split, what would be an approximate market price per share after the split? $ per share c. Journalize the entry to record the stock split. If no entry is required, type "No Entry" and leave the...

You buy 100 shares of Apple common stock at a price of $55.75. One quarter later,...

You buy 100 shares of Apple common stock at a price of $55.75. One quarter later, you collect a dividend of $1.51 per share and sell your stock for $66.38 per share. What is the rate of return on your investment? (You may ignore commissions and taxes.) Do not round at intermediate steps in your calculation. Express your answer in percent. Round to two decimal places. Do not type the % symbol. If the return is negative, then include a...

You buy 100 shares of Apple common stock at a price of $60.98. One quarter later,...

You buy 100 shares of Apple common stock at a price of $60.98. One quarter later, you collect a dividend of $1.73 per share and sell your stock for $67.44 per share. What is the rate of return on your investment? (You may ignore commissions and taxes.) Do not round at intermediate steps in your calculation. Express your answer in percent. Round to two decimal places. Do not type the % symbol. If the return is negative, then include a...

5. Apple Stock: The volume of a stock is the number of shares traded in the...

5. Apple Stock: The volume of a stock is the number of shares traded in the stock in a day. The mean volume of Apple stock in 2017 was 35.14 million shares. A stock analyst believes that the volume of Apple stock has increased since then. He randomly selects 40 trading days and determines the sample mean volume to be 41.06 million shares with sample std. deviation of 15.07 million shares. Test the stock analyst’s claim at the a =...

You don't need to be rich to buy a few shares in a mutual fund. The...

You don't need to be rich to buy a few shares in a mutual fund. The question is, how reliable are mutual funds as investments? This depends on the type of fund you buy. The following data are based on information taken from a mutual fund guide available in most libraries. A random sample of percentage annual returns for mutual funds holding stocks in aggressive-growth small companies is shown below. -1.1 14.5 41.9 17.5 -16.6 4.4 32.6 -7.3 16.2 2.8...

You don't need to be rich to buy a few shares in a mutual fund. The...

You don't need to be rich to buy a few shares in a mutual fund. The question is, how reliable are mutual funds as investments? This depends on the type of fund you buy. The following data are based on information taken from a mutual fund guide available in most libraries. A random sample of percentage annual returns for mutual funds holding stocks in aggressive-growth small companies is shown below. -1.5 14.5 41.9 17.5 -16.9 4.4 32.6 -7.3 16.2 2.8...

You don't need to be rich to buy a few shares in a mutual fund. The...

You don't need to be rich to buy a few shares in a mutual fund. The question is, how reliable are mutual funds as investments? This depends on the type of fund you buy. The following data are based on information taken from a mutual fund guide available in most libraries. A random sample of percentage annual returns for mutual funds holding stocks in aggressive-growth small companies is shown below. -1.2 14.5 41.1 17.3 -16.5 4.4 32.6 -7.3 16.2 2.8...

You don't need to be rich to buy a few shares in a mutual fund. The...

You don't need to be rich to buy a few shares in a mutual fund. The question is, how reliable are mutual funds as investments? This depends on the type of fund you buy. The following data are based on information taken from a mutual fund guide available in most libraries. A random sample of percentage annual returns for mutual funds holding stocks in aggressive-growth small companies is shown below. -1.3 14.8 41.3 17.5 -16.6 4.4 32.6 -7.3 16.2 2.8...

Question

Apple recently had a stock split, so I decided to buy a few shares of Apple...

Solutions

Expert Solution

Related Solutions

Apple has recently split its stock on a 4-for-1 basis. After this transaction, which of the...

2. When Apple introduced its first iPhone, it had few competitors and so it set a...

A corporation, which had 33,300 shares of common stock outstanding, declared a 3-for-1 stock split. a....

You buy 100 shares of Apple common stock at a price of $55.75. One quarter later,...

You buy 100 shares of Apple common stock at a price of $60.98. One quarter later,...

5. Apple Stock: The volume of a stock is the number of shares traded in the...

You don't need to be rich to buy a few shares in a mutual fund. The...

You don't need to be rich to buy a few shares in a mutual fund. The...

You don't need to be rich to buy a few shares in a mutual fund. The...

You don't need to be rich to buy a few shares in a mutual fund. The...