Carole Corp’s stock has a beta of 1.25, expected return of 8.5%, current market price of...
Carole Corp’s stock has a beta of 1.25, expected return of 8.5%, current market price of $32, and intrinsic value of $46. Which of the following is true?
|
The stock has no idiosyncratic risk. |
||
|
The stock is fairly valued. |
||
|
The stock is overvalued. |
||
|
There is not enough information to make a decision. |
||
|
The stock is undervalued. |
Homework Answers
Correct option is "E"- The stock is undervalued.
When current market price ($ 32 per share ) is lower than intrinsic value (Book value of $ 46 per share) ,stock is said to undervalued.
Since the value traded in market is lower than its book value .
Add Answer to:
Carole Corp’s stock has a beta of 1.25, expected return of 8.5%,
current market price of...
A company's stock has a beta of 1.56, expected return of 9.5%, current market price of...
A company's stock has a beta of 1.56, expected return of 9.5%, current market price of $20, and intrinsic value of $30. Which of the following is true? The stock has no idiosyncratic risk. The stock is undervalued. The stock is fairly valued. There is not enough information to make a decision. The stock is overvalued.
Suppose Jada Corp’s stock beta is 1.4. If the current market risk premium is 8% and...
Suppose Jada Corp’s stock beta is 1.4. If the current market risk premium is 8% and the risk-free rate is 2%, what is Jada Corp’s required return? 10.40% 11.20% 14.00% 13.20% None of these The expected return of the S&P 500 Index is 10%. According to stock analysts, Ingrid Corp stock has an expected return of 15%. You should buy this stock if you believe the following: You should buy the stock, regardless of the stock’s beta. You should never...
| 15% 34. An analyst collects the following data: Expected market return Risk free rate 8%...
| 15% 34. An analyst collects the following data: Expected market return Risk free rate 8% Expected return on Stock X | 17.75% Stock X's beta 1.25 Using these data and CAPM, which of the following statements about stock X is true? Overvalued by 1.75 percentage point Overvalued by 2.25 percentage point Properly valued Undervalued by 1.00 percentage point Undervalued by 3.25 percentage point UDO
+ 34. An analyst collects the following data: Expected market return 15% Risk free rate 8%...
+ 34. An analyst collects the following data: Expected market return 15% Risk free rate 8% Expected return on Stock X 17.75% Stock X's beta 1.25 Using these data and CAPM, which of the following statements about stock X is true? Overvalued by 1.75 percentage point Overvalued by 2.25 percentage point Properly valued Undervalued by 1.00 percentage point Undervalued by 3.25 percentage point
Stock Y has a beta of 1.30 and an expected return of 13.5 percent. Stock Z...
Stock Y has a beta of 1.30 and an expected return of 13.5 percent. Stock Z has a beta of .75 and an expected return of 10.6 percent. If the risk-free rate is 4.75 percent and the market risk premium is 7.25 percent, are these stocks overvalued or undervalued? stock Y = ______ stock Z = ______
Althea Corp’s stock beta is 2.13 and its standard deviation is 1.8. Bertha Corp’s stock beta...
Althea Corp’s stock beta is 2.13 and its standard deviation is 1.8. Bertha Corp’s stock beta is 1.67 and its standard deviation is 1.95. Which of the following statements must be true, assuming the CAPM is correct. Althea Corp’s stock has more total risk than Bertha Corp’s stock. Althea Corp’s stock is a more desirable addition to a portfolio than Bertha Corp’s stock. The expected return of Althea Corp’s stock will be greater than that of Bertha Corp’s stock. The...
11. Assume that the Risk Free rate is 5% and the Expected Return on the market...
11. Assume that the Risk Free rate is 5% and the Expected Return on the market is 10%. Show if these stocks are under, over, or fairly valued. Illustrate it in a chart with the SML and the expected returns of the stocks. CAPM returnasseti RiskFree + [E(Rmarket)- Risk Free] Basset i Security САРМ Over/Under E(Return) Beta Return |Valued? Stock W Stock Y Stock Z 0.035 0.85 1.2 0.095 0.12 1.1 Show (and explain) your results in the following chart....
A stock has a beta of 1.25, the expected return on the market is 15 percent,...
A stock has a beta of 1.25, the expected return on the market is 15 percent, and the risk-free rate is 4.60 percent. What must the expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. Expected 13.50 % return 15
Fill in the blanks Stock Y has a beta of 1.4 and an expected return of...
Fill in the blanks
Stock Y has a beta of 1.4 and an expected return of 15.2 percent. Stock Z has a beta of 7 and an expected return of 9.1 percent. If the risk-free rate is 5.4 percent and the market risk premium is 6.4 percent, the reward-to-risk ratios for Stocks Y and Z are and percent, respectively. Since the SML reward-to-risk is percent, Stock Y is undervalued and Stock Z is overvalued (Do not round intermediate calculations and...
Stock A has an 8.5% expected rate of return and a beta coefficient of 0.85. Stock...
Stock A has an 8.5% expected rate of return and a beta coefficient of 0.85. Stock B has a 10.5% expected rate of return and a beta coefficient of 1.05. The risk-free rate is 4.5% and the market risk premium is 5%. A) What are the required rates of return for Stocks A and B? B) Would you buy these stocks and why? Please show all work
| 15% 34. An analyst collects the following data: Expected market return Risk free rate 8% Expected return on Stock X | 17.75% Stock X's beta 1.25 Using these data and CAPM, which of the following statements about stock X is true? Overvalued by 1.75 percentage point Overvalued by 2.25 percentage point Properly valued Undervalued by 1.00 percentage point Undervalued by 3.25 percentage point UDO
+ 34. An analyst collects the following data: Expected market return 15% Risk free rate 8% Expected return on Stock X 17.75% Stock X's beta 1.25 Using these data and CAPM, which of the following statements about stock X is true? Overvalued by 1.75 percentage point Overvalued by 2.25 percentage point Properly valued Undervalued by 1.00 percentage point Undervalued by 3.25 percentage point
11. Assume that the Risk Free rate is 5% and the Expected Return on the market is 10%. Show if these stocks are under, over, or fairly valued. Illustrate it in a chart with the SML and the expected returns of the stocks. CAPM returnasseti RiskFree + [E(Rmarket)- Risk Free] Basset i Security САРМ Over/Under E(Return) Beta Return |Valued? Stock W Stock Y Stock Z 0.035 0.85 1.2 0.095 0.12 1.1 Show (and explain) your results in the following chart....
A stock has a beta of 1.25, the expected return on the market is 15 percent, and the risk-free rate is 4.60 percent. What must the expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Answer is complete but not entirely correct. Expected 13.50 % return 15
Fill in the blanks
Stock Y has a beta of 1.4 and an expected return of 15.2 percent. Stock Z has a beta of 7 and an expected return of 9.1 percent. If the risk-free rate is 5.4 percent and the market risk premium is 6.4 percent, the reward-to-risk ratios for Stocks Y and Z are and percent, respectively. Since the SML reward-to-risk is percent, Stock Y is undervalued and Stock Z is overvalued (Do not round intermediate calculations and...
Most questions answered within 3 hours.
-
Which statement is always true: The total energy of a closed
system...
A) is always equally...
asked 38 seconds ago -
find the critical value associated with a right sided hypothesis of
the mean using a sample...
asked 2 hours ago -
Which of the following statements is true with respect to a
simple linear regression model?
a....
asked 2 hours ago -
The energy required to remove an electron from a surface of a
solid element is called...
asked 4 hours ago -
How would you train your employees to avoid risks of using
mobile devices?
asked 4 hours ago -
Assume Kw = 1.01 ✕ 10−14
For pure water, we can calculate [H3O+ ] = [OH...
asked 5 hours ago -
Suppose that on a temperature scale X, water boils at 203.0°X
and freezes at -105.7°X. What...
asked 6 hours ago -
BaS crystallizes in a cubic unit cell with S2- ions on each
corner and each face....
asked 6 hours ago -
A. 0≤P(Oi)≤10≤P(Oi)≤1 for each i
B. P(Oi)≤0P(Oi)≤0
C. P(Oi)=1+P(OCi)P(Oi)=1+P(OiC)
D. P(Oi)≥1P(Oi)≥1
If an experiment consists of...
asked 8 hours ago -
A battery has an emf of 9.20V and an internal resistance of 1.20
ohm. a)What resistance...
asked 8 hours ago -
The area of an elastic circular loop decreases at a constant
rate, dA/dt = −6.60×10−3 m2/s...
asked 9 hours ago -
The denaturation of proteins can be described by the
equilibrium
F⇌U
where F and U represent...
asked 10 hours ago