Suppose there is one year until the expiration date, the stock price S = 100 and ei = 0.2, e = 0.1. Then what is the value /27 of vega v using Ce ? (Hint: enter the exact number)
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Q: what is the stock's expected total return
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- 3. Pro BE 8.12 (Required Rate of Return) eBook 8 Suppose TRF = 3%, TM = 9%, and b; = 1.4. a. What is ri, the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose TRF increases to 4%. The slope of the SML remains constant. How would this affect rm and ri? I. TM will remain the same and r₁ will increase by 1 percentage point. II. rm will increase by 1 percentage point and ri will remain the same. III. Both rm and rì will decrease by 1 percentage point. IV. Both rm and r₁ will remain the same. V. Both rm and r will increase by 1 percentage point. -Select- Problem Walk-Through 2. Now suppose TRF decreases to 2%. The slope of the SML remains constant. How would this affect rm and r₁? I. rm will remain the same and r; will decrease by 1 percentage point. II. Both rm and n will increase by 1 percentage point. III. Both rm and r will remain the same. IV. Both rm and r; will decrease by 1 percentage point. V. rm will decrease by 1 percentage point and…What is the CAPM required return for Stock Z, in decimal form? Round your answer to 4 decimal places (example: if your answer is .13579, you should enter .1358). Margin of error for correct responses: +/- .0005. expected return (implied by market price) Beta Stock Z 9.3% 1.22 MRP 6% ? T-bonds 5% ?If D0 = $2.25, g (which is constant) = 3.6%, and P0 = $50.00, then what is the stock's expected total return for the coming year? A 8.10% - This is incorrect B 4.83% C 4.66% - This is incorrect D 4.50% - This is incorrect E 8.26%
- 1. Use the one-period valuation model P = E/(1 + k) + P1/(1 + k) to price the following stocks (remember to decimalize percentages). Earnings (E = $) 1.00 1.00 1.00 0 0 0 1.00 1.50 2.00 0 Required return (k = %) 10 15 20 5 5 5 10 10 10 10 Expected Price Next Year (P1 = $) 20 20 20 20 30 40 50 50 50 1 Answer: Price Today (P = $) 19.10 18.26 17.50 19.05 28.57 38.10 46.36 46.82 47.27 0.912. Required Rate of Return Suppose TRF = 4%, FM 9%, and FA = 8%. (a) Calculate Stock A's beta. Round your answer to one decimal place. - (b) If Stock A's beta were 1.3, then what would be A's new required rate of return? Round your answer to one decimal place. % 22222222 122122222322 2014 25226225 250-50 22 352525 2----- 2015Consider the following information: Rate of return State of Economy Probability Stock A Stock B Recession 0.30 -40% 6% Normal 0.50 18% 4% Воom 0.20 142% 2% [Note: take full decimal places in the middle steps and round your FINAL answer to 2 decimal places (i.e. S1.23 or 1.23%)] (a) Calculate the expected return for the two Stocks A and B respectively. (in %) (b) Calculate the standard deviation for the two Stocks A and B respectively. (in %) (c) If you have $2 million to invest in a stock portfolio and your goal is to create a portfolio with an expected return of 16.92%, how much money will you invest in Stock A and Stock B respectively? (d) Based on your answer in part (c), calculate the standard deviation for the portfolio. (in %) (e) If enough stocks (i.e. 100 randomly selected stocks) had been included in the portfolio, what happen to the standard deviation for the portfolio? Explain. [within 100 words]
- Year AT&T Stock Returns Market Index Returns 1 8 6 2 7 3 3 10 12 4 14 13 5 8 9 The equation of the characteristic line for AT&T is: Group of answer choices Return = 0.538 + 0.9200*Market Return Return = -3.089 + 1.2436*Market Return Return = 0.813 + 0.6530*Market Return Return = 0.471 + 0.0311*Market Return Return = 4.578 + 0.5607*Market ReturnProblem 8.06 (Expected Returns) Stock A and Bs have the following profitability distributions of expected future returns's Profitability 0.1 0.1 0.5 0.2 0.1 A (890) 니 16 18 31 B (20%) 0 20 27 37 a) Calculate the expected rate of return, FB, for stock B3 (FA= 14,30%) b) Calculate the standard denation of expected returns, OA, for stock A (OB = 15.18% 2 Now calculate the coefficient of variation for stock B. C) Assume the risk-rate is 1.5% What are the Sharpe rutius for Stacks A and B? Stock A. Stock BiCalculate the expected return of the following information of Bader stock State 1 3 Probability 0.20 0.60 0.20 Bader (%) - 5% 10 % 20% Nasir (%) -10 % 10 % 40% A I !!!
- Intro We know the following expected returns for stocks A and B, given different states of the economy: State (s) Probability E(rA.s) E(rB,s) -0.1 0.04 0.08 0.05 0.13 0.07 Recession 0.2 Normal 0.5 Expansion 0.3 Part 1 What is the expected return for stock A? 3+ decimals SubmitSteck prce 7 $20 Today- use a I step bunomial tree to estimale price f a l year call on this stock. assume the pice Can uncrease or decrease in the next 10 o by equal ulith year Cikelihovd. Risk free rale is o 2% the strike is $ 21. tina the ratio (H) conHen out a decimal find the Call's valu o price today use above unformalion to price a put using call paity.Given the information in the table below, what is the covariance between the return series of stock A and B. Round your answer! A B Year Past Returns Past Return 2017 20 16 2018 2 12 2019 -2 9 ER] 6.67 11.33 STD 11.72 3.51 W 50.00% 50.00% PAB 0.9638 None of the answers is correct 55.24 50.33 33.12 39.65