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Q4) An analyst gathered the following information for a stock and market parameters: stock beta = 1.00; expected return on the Market = 10.90%; expected
Q4) An analyst gathered the following information for a stock and market parameters: stock beta = 1.00; expected return on the Market = 10.90%; expected return on T-bills = 2.40%; current stock Price = $9.40; expected stock price in one year = $11.07; expected dividend payment next year = $3.49. Calculate the a) Required return for this stock (1 point): |
b) Expected return for this stock (1 point): |
Q5) The market risk premium for next period is 9.00% and the risk-free rate is 1.50%. Stock Z has a beta of 1.32 and an expected return of 14.30%. What is the: a) Market's reward-to-risk ratio? (1 point): |
b) Stock Z's reward-to-risk ratio (1 point): |
For the final answers, round your answer to the nearest 4 decimal places (3 decimals for the reward-to-risk ratio and 2 for the beta-coefficient). If you need to use a calculated number for further calculations, DO NOT round until after all calculations have been completed. |
Answer all questions or I will downvote.
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