Question

You run a regression of X’ Company stock's returns against the market returns over a five-year time period (using monthly data) and come up with the following output: Intercept = .20%, Slope = 1.20 Your stock had an annualized standard deviation of returns of 40% whereas the market standard deviation was only 20%. The annualized risk-free rate, on average, over the last five years has been 6% and it is currently at 7%. The risk premium = 8.5%. The annualized dividend per share currently is $2.00 and the stock is currently selling for $50 (There are 100,000 shares outstanding) Evaluate the performance of X Company over the five-year time period of your analysis.

Answer #1

You have observed the following returns over time: Year: Stock
X: Market: 2014 18% 14% 2015 6% 8% 2016 23% 12% Assume that the
risk-free rate is 6% and the market risk premium is 5%. a) What are
the expected rates of return on Stock X and the market? b) What is
the standard deviation on Stock X and the market? c) What is the
Beta for Stock X given a correlation to the market of 0.8117? Is
Stock X...

Observe the following returns over time:
Year:
Stock A:
Market:
2014
18%
14%
2015
6%
8%
2016
23%
12%
Assume that the risk-free rate is 6% and the market risk premium
is 5%.
a) What are the expected rates of
return on Stock A and the market?
b) What is the standard deviation
on Stock A and the market?
c) What is the Beta for Stock X
given a correlation to the market of 0.8117? Is Stock A more or
less...

9. You’ve observed the following returns on Barnett
Corporation’s stock over the past five years: -12 percent, 23
percent, 18 percent, 7 percent, and 13 percent
What was the arithmetic average return on the stock over
this five-year period?
What was the variance of the returns over this period?
The standard deviation?
10. For problem 9, suppose the average inflation rate
over this period was 3.2 percent and the average T-bill rate over
the period was 4.3 percent.
A What...

The market expects a stock to return 14.54% over then next year.
The stock's beta is 0.84. If the risk-free is 1.87% and the market
risk premium is 5.22%, what is the stock's alpha?
Your father asked for your help. He has been offered an annuity
that will pay him $1,566 per month for 23 years. He thinks that the
fair return should be 4.37%. What is the most he should be willing
to pay for it today? Enter only...

9. Calculating Returns and Variability You’ve observed the
following returns on Yasmin Corporation’s
stock over the past five years: 19 percent, −13 percent, 7 percent,
25 percent, and 16 percent.
a. What was the arithmetic average return on the company’s stock
over this five-year period?
b. What was the variance of the company’s stock returns over this
period? The standard deviation?
10. Calculating Real Returns and Risk Premiums In Problem 9,
suppose the average inflation rate over
this period was...

You’ve observed the
following returns on SkyNet Data Corporation’s stock over the past
five years: 19 percent, 24 percent, 11 percent, −9 percent, and 13
percent.
a.What was the arithmetic average return
on the company’s stock over this 5-year period?
b.What was the variance of the company’s
returns over this period? The standard deviation?
Suppose the average
inflation rate over this period was 3.6 percent and the average
T-bill rate over the period was 4.1 percent.
c.What...

You’ve observed the following returns on Crash-n-Burn Computer’s
stock over the past five years: 4 percent, –15 percent, 26 percent,
19 percent, and 14 percent.
What was the arithmetic average return on the company's stock
over this five-year period?
What was the variance of the company's returns over this
period?
What was the standard deviation of the company’s returns over
this period?

Hi here's my question!
You have just done a regression of monthly stock returns of
Royal Inc., on monthly market returns
over the past five years and have come up with the following
regression:
?" =0.03+1.4×?+
The variance of the stock is 50%, and the variance of the market
is 20%. The current risk-free rate is 3% (it was 5% one year ago)
and the market risk premium is 8.76%. The stock is currently
selling for $50, down $4 over...

Suppose we have the following returns for large-company stocks
and Treasury bills over a six year period:
Year
Large
Company
US Treasury
Bill
1
3.66
4.66
2
14.44
2.33
3
19.03
4.12
4
–14.65
5.88
5
–32.14
4.90
6
37.27
6.33
a.
Calculate the arithmetic average returns for large-company
stocks and T-bills over this period. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.)
Average
returns
Large company
stocks
%
T-bills...

Neon Corporation’s stock returns have a covariance with the
market portfolio of .0315. The standard deviation of the returns on
the market portfolio is 20 percent, and the expected market risk
premium is 8.5 percent. The company has bonds outstanding with a
total market value of $55.1 million and a yield to maturity of 7.5
percent. The company also has 4.60 million shares of common stock
outstanding, each selling for $30. The company’s CEO considers the
current debt–equity ratio optimal....

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