Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a 1. Long term gov't bonds are returning 4%. The equity risk premium is 5%. If XYZ stock has a beta of 0.6, what is

image text in transcribed
a 1. Long term gov't bonds are returning 4%. The equity risk premium is 5%. If XYZ stock has a beta of 0.6, what is its expected return?(Don't round intermediate calculations and give at least 4 significant digits in your answer) 2. Assume 20% of a portfolio in ABC, 60% in DEF, and 20% in GHI. ABC returned 10%, DEF returned 5%, and GHI returned 7%. What was the portfolio's return? (Give at least 4 significant digits in your answer) a 3. Stock A had a market value of $20, Stock B had a market value of $30. During the year, Stock A generated cash flow of $3 and Stock B generated cash flow of $4. The current market values are, Stock A is $22, and Stock B is $31. What is the rate of return on stock B? (Give at least 4 significant digits in your answer) 4. An investment has returned 5%, 3%, -4%, 6%, and -7% in each of the last five years, respectively. We have decided that we want to use historical returns as a proxy for expected future returns. What is the expected rate of return

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quality Investing Owning The Best Companies For The Long Term

Authors: Lawrence A. Cunningham, Torkell T. Eide, Patrick Hargreaves

1st Edition

0857195123, 9780857195128

More Books

Students also viewed these Finance questions