Stocks A and B have the following data. Assuming the stock market is efficient and the...

Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium. a. What is the dividend yield for each stock? b. Based on your answer to questions in a. what will the dividend for each stock be next year? c. What was the dividend for each stock be this year? A B Required return 8% 13% Market price $15 $4 Expected growth 6% 12%

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jeff jeffy answered 11 months ago

Stocks A and B have the following returns: Stock A Stock B 1 0.11 ...

Stocks A and B have the following returns: Stock A Stock B 1 0.11 0.06 2 0.06 0.04 3 0.15 0.04 4 0.03 0.01 5 0.07 -0.03 a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 0.48, what is the expected return and standard deviation of a portfolio of 56% stock A and 44%...

There are two stocks in the market, Stock A and Stock B . The price of...

There are two stocks in the market, Stock A and Stock B . The price of Stock A today is $85. The price of Stock A next year will be $74 if the economy is in a recession, $97 if the economy is normal, and $107 if the economy is expanding. The probabilities of recession, normal times, and expansion are .30, .50, and .20, respectively. Stock A pays no dividends and has a correlation of .80 with the market portfolio....

There are two stocks in the market, Stock A and Stock B. The price of Stock...

There are two stocks in the market, Stock A and Stock B. The price of Stock A today is $85. The price of Stock A next year will be $74 if the economy is in a recession, $97 if the economy is normal, and $107 if the economy is expanding. The probabilities of recession, normal times, and expansion are .30, .50, and .20, respectively. Stock A pays no dividends and has a correlation of .80 with the market portfolio. Stock...

Stocks A and B have the following? returns: Stock A Stock B 1 0.11 &nb

Stocks A and B have the following? returns: Stock A Stock B 1 0.11 0.05 2 0.06 0.02 3 0.15 0.05 4 -0.04 0.02 5 0.08 -0.04 a. What are the expected returns of ?stock A and Stock B? b. What are the standard deviations of the returns of stock A and stock B? c. If their correlation is 0.43?, what is the expected return and standard deviation of a portfolio of 55?% stock A and 45?% stock? B?

Two stocks, stock A and B, are available in the stock market. The price of the...

Two stocks, stock A and B, are available in the stock market. The price of the stock A today is $50. The price of stock A next year will be $40 if the economy is in a recession, $55 if the economy is normal, and $60 if the economy is expanding. The probabilities of recession, normal times, and expansion are 0.1, 0.8, and 0.1, respectively. Stock A pays no dividends and has a correlation of 0.8 with the market portfolio....

Stocks A and B have the following returns: Stock A Stock B 1 0.08 0.06 2...

Stocks A and B have the following returns: Stock A Stock B 1 0.08 0.06 2 0.05 0.01 3 0.12 0.06 4 −0.04 0.03 5 0.08 −0.02 a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is0.45, what is the expected return and standard deviation of a portfolio of 62%stock A and 38%stock B?

Stocks A and B have the following returns: Stock A Stock B 1 0.11 0.06 2...

Stocks A and B have the following returns: Stock A Stock B 1 0.11 0.06 2 0.07 0.04 3 0.13 0.03 4 −0.01 0.02 5 0.08 −0.03 (Round to three decimal places.) a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 0.45, what is the expected return and standard deviation of a portfolio of 70% stock A and 30% stock B?...

Stocks A and B have the following returns: Stock A Stock B 1 0.110.11 0.050.05 2...

Stocks A and B have the following returns: Stock A Stock B 1 0.110.11 0.050.05 2 0.070.07 0.030.03 3 0.140.14 0.030.03 4 negative 0.02−0.02 0.010.01 5 0.080.08 negative 0.04−0.04 a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 0.44 what is the expected return and standard deviation of a portfolio of 78% stock A and 22% stock B?

Is the market for all stocks equally efficient? Explain.

What does it mean that the stock market is efficient? What makes the stock market efficient?

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