Question
(c)Mr. Wong works as an equity fund manager for Eastspring Investments Berhad. He expects the risk-free rate (RFR) to be 10 percent and the market
(c)Mr. Wong works as an equity fund manager for Eastspring Investments Berhad. He expects the risk-free rate (RFR) to be 10 percent and the market return to be 14 percent. He also has the following information about three stocks.
Current Expected Expected Stock Beta Price Price Dividend A 0.85 $22 $24 $0.75 B 1.25 $48 $51 $2.00 C -0.20 $37 $40 $1.25
Required: (i) Compute the expected return of stock A, B, and C. (7 marks) (ii) Based on your answer in (i), indicate what action Mr. Wong would take with regards to these stocks. (9 marks) (iii) Examine your decisions. (2 marks)
Please do it as soon as possible,thanks!!!
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