Question

. Suppose you purchase a stock for $100. Assume your expectations regarding the stock price are...

. Suppose you purchase a stock for $100. Assume your expectations regarding the stock price are as follows:

State of the Economy

Probability

Year end price

Cash dividends

Holding period return(HPR)

Boom

0.3

129.50

4.50

0.34

Normal growth

0.5

110.00

4.00

0.14

Recession

0.2

80.50

3.50

-0.16

Compute the Mean and standard deviation of the HPR on stocks.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR...
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.3 44% Normal growth 0.6 22 Recession 0.1 -15 Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR...
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.3 44% Normal growth 0.6 22 Recession 0.1 -15 Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Mean % Standard deviation %
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR...
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.3 44% Normal growth 0.6 22 Recession 0.1 -15 Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculations. Round your answers to 2 decimal places.) mean? standard deviation?
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR...
Suppose your expectations regarding the stock market are as follows: State of the Economy Probability HPR Boom 0.3 44% Normal growth 0.4 14 Recession 0.3 -16 Use the above forecasted distribution to compute the expected return of the stock market. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Another analyst has different opinions regarding the probablities of Boom and Recession states. (She agrees with you on all the other numbers in the table.) You know that...
Suppose an economy has three states: boom, normal, and recession. Assume that the probability of a...
Suppose an economy has three states: boom, normal, and recession. Assume that the probability of a boom state is 0.2, a normal state is 0.5, and a recession state is 0.3. And there are three stocks in this economy, called Alpha, Beta, and Gamma respectively. The return performance of these stocks has been summarized by the following table: Alpha Beta Gamma boom 15% 28% 1% normal 6% 12% 3% recession -12% -30% 20% (Please show your intermediate processes, instead of...
You purchased 100 shares of General Motors stock at a price of $106.82 one year ago....
You purchased 100 shares of General Motors stock at a price of $106.82 one year ago. You sold all stocks today for $106.94. During the year, the stock paid dividends of $5.88 per share. What is your holding period return? You are considering the purchase of Crown Bakery, inc. common stock that just paid a dividend of $15.15 per share. You expect the dividend to grow at a rate of 5.34 percent per year, indefinitely. You estimate that a required...
Question 1. (Total: 25 marks) You want to buy a car valued at $48,000. You wi...
Question 1. (Total: 25 marks) You want to buy a car valued at $48,000. You wi ll make an upfront down -payment of $5,000 on the car , and borrow the rest of the money from your bank. Your bank will give you a 5- year loan at 2.5% APR compounded semi -annually . You plan to make biweek ly payments (i.e., one payment every two weeks) on the loan . The bank requires that you make the first payment...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT