Question
1. a) An analyst gathered the following information for a stock and market parameters: stock beta = 1.22; expected return on the Market = 8.17%;
1.
a) An analyst gathered the following information for a stock and market parameters:
stock beta = 1.22;
expected return on the Market = 8.17%;
expected return on T-bills = 2.08%;
current stock Price = $6.2;
expected stock price in one year = $14.64;
expected dividend payment next year = $3.14.
Calculate the required return for this stock. Please share your answer as a percentage rounded to 2 decimal places.
b) An analyst gathered the following information for a stock and market parameters:
stock beta = 1.37;
expected return on the Market = 9.04%;
expected return on T-bills = 3.3%;
current stock Price = $6.82;
expected stock price in one year = $9.17;
expected dividend payment next year = $3.6.
Calculate the expected return for this stock. Please share your answer as a percentage rounded to 2 decimal places.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started