Security Analysis and Portfolio Management

a) You have been given the following historical data on XYZ Corporation: year XYZ return market return 1986 20% 30% 1987 -15% -10% 1988 25% 10% 1989 -20% -10% 40% 20% 1990 i. The estimated beta for XYZ is 1.25. The price of XYZ stock was $50 a year ago, and today it is $55. The dividends paid by XYZ over the last twelve months amount to $3. The T-bill rate a year ago was 6%, and the NYSE index has risen 10% over the past year. Assume that the average dividend yield on all stocks is 3% and evaluate the performance of XYZ stock over the past year. (13 marks) If the T-bill rate today is 5.5%, what would you project the price of XYZ stock to be a year from today? (Assume that XYZ will continue to pay an annual dividend of $1). (7 marks) ii. a) You have been given the following historical data on XYZ Corporation: year XYZ return market return 1986 20% 30% 1987 -15% -10% 1988 25% 10% 1989 -20% -10% 40% 20% 1990 i. The estimated beta for XYZ is 1.25. The price of XYZ stock was $50 a year ago, and today it is $55. The dividends paid by XYZ over the last twelve months amount to $3. The T-bill rate a year ago was 6%, and the NYSE index has risen 10% over the past year. Assume that the average dividend yield on all stocks is 3% and evaluate the performance of XYZ stock over the past year. (13 marks) If the T-bill rate today is 5.5%, what would you project the price of XYZ stock to be a year from today? (Assume that XYZ will continue to pay an annual dividend of $1). (7 marks)