A Use the following table for questions 38 - 50 SECURITY A SECURITY B Dividends paid Five (5) Years Ago 1.56 $ 0.96 Current Dividend $ 3.42 $ 2.01 Most Recent Annual Return 20% 15% Retention Ratio 75% 80% Standard Deviation 12% 14% Beta 1.40 1.50 P/E Ratio 12.5 10.0 Return on Equity 22.67% 20.00% Earnings Per Share $ 13.68 $ 10.05 Correlation coefficient (between AB) 0.35 Expected Return Growth Rate Required Return PEG Ratio Current Price Fair Price Sharpe Index Treynor Index Alpha Covariance Other Information The rate on 90 day T-Bills is currently 5.5%. The Market Risk Premium is 12%. Assume Security A's growth rate of dividends in the future is going to continue at the same rate as the last 5 years. Professor's note: The items that are italicized, will all have to be calculated, in order to arrive at the bold font items, which are the actual questions below). 43. What is Security A's Alpha (Jensen's Alpha ? A. -4.83 B. -2.96 C. -2.30 D. 4.15 E. 5.72 Make your selection: 44. What is Security A's Treynor Index? A. B. C. D. E. 3.46 7.91 9.04 10.25 10.36 Make your selection: 45. What is the fair price for Security B? A. B. C. D. E. Make your selection: Can't determine $ 25.00 $ 31.00 $ 85.25 $ 100.50 46. What is Security B's PEG ratio? A. B. C. D. E. Make your selection: Can't determine 0.500 0.625 0.667 16.667 47. What is Security B's expected return? A. | Can't determine 16.72% 17.57% 18.32% 19.64% 48. What is Security B's Sharpe Index? A. B. C. D. E. Make your selection: 0.68 0.82 1.14 1.36 6.57 49. What is Security B's Alpha (Jensen's Alpha)? A. -8.50 B. -7.86 C. -7.15 D. 3.30 E. 7.25 Make your selection: 50. What is Security B's Treynor Index? A. B. C. D. E. Make your selection: 5.96 6.33 7.00 7.24 15.67 A Use the following table for questions 38 - 50 SECURITY A SECURITY B Dividends paid Five (5) Years Ago 1.56 $ 0.96 Current Dividend $ 3.42 $ 2.01 Most Recent Annual Return 20% 15% Retention Ratio 75% 80% Standard Deviation 12% 14% Beta 1.40 1.50 P/E Ratio 12.5 10.0 Return on Equity 22.67% 20.00% Earnings Per Share $ 13.68 $ 10.05 Correlation coefficient (between AB) 0.35 Expected Return Growth Rate Required Return PEG Ratio Current Price Fair Price Sharpe Index Treynor Index Alpha Covariance Other Information The rate on 90 day T-Bills is currently 5.5%. The Market Risk Premium is 12%. Assume Security A's growth rate of dividends in the future is going to continue at the same rate as the last 5 years. Professor's note: The items that are italicized, will all have to be calculated, in order to arrive at the bold font items, which are the actual questions below). 43. What is Security A's Alpha (Jensen's Alpha ? A. -4.83 B. -2.96 C. -2.30 D. 4.15 E. 5.72 Make your selection: 44. What is Security A's Treynor Index? A. B. C. D. E. 3.46 7.91 9.04 10.25 10.36 Make your selection: 45. What is the fair price for Security B? A. B. C. D. E. Make your selection: Can't determine $ 25.00 $ 31.00 $ 85.25 $ 100.50 46. What is Security B's PEG ratio? A. B. C. D. E. Make your selection: Can't determine 0.500 0.625 0.667 16.667 47. What is Security B's expected return? A. | Can't determine 16.72% 17.57% 18.32% 19.64% 48. What is Security B's Sharpe Index? A. B. C. D. E. Make your selection: 0.68 0.82 1.14 1.36 6.57 49. What is Security B's Alpha (Jensen's Alpha)? A. -8.50 B. -7.86 C. -7.15 D. 3.30 E. 7.25 Make your selection: 50. What is Security B's Treynor Index? A. B. C. D. E. Make your selection: 5.96 6.33 7.00 7.24 15.67
