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.
Homework Answers
As the intrinsic value is greater than the market price, the following is true:
b) The stock is undervalued.
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A company's stock has a beta of 1.56, expected return of 9.5%,
current market price of...
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.
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 = ______
1/3). Each stock is described in the Wilson holds a portfolio that invests equally in three...
1/3). Each stock is described in the Wilson holds a portfolio that invests equally in three stocks (WA = WB Wc following table: Stock Beta Standard Deviation Expected Return A 0.5 23% 7.5% B 1.0 38% 12.0% C 2.0 45% 14.0% An analyst has used market and firm-specific information to generate expected return estimates for each stock. The analyst's expected return estimates may or may not equal the stocks' required returns. You've also determined that the risk-free rate (TRF) is...
| 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
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 Y has a beta of 1.2 and an expected return of 11.1 percent. Stock Z...
Stock Y has a beta of 1.2 and an expected return of 11.1 percent. Stock Z has a beta of .80 and an expected return of 7.85 percent. If the risk-free rate is 2.4 percent and the market risk premium is 7.2 percent, the reward-to-risk ratios for stocks Y and Z are 7.25 and ??????? percent, respectively. Since the SML reward-to-risk is 7.20 percent, Stock Y is undervalued and Stock Z is overvalued (Do not round intermediate calculations and enter...
Stock Y has a beta of 1.2 and an expected return of 15.3 percent. Stock Z...
Stock Y has a beta of 1.2 and an expected return of 15.3 percent. Stock Z has a beta of 0.8 and an expected return of 10.7 percent. If the risk-free rate is 6 percent and the market risk premium is 7 percent, the reward-to-risk 7.75 and ratios for stocks Y and Z are 5.88 percent, respectively. Since the SML reward-to-risk is 7.0 percent, Stock Y is undervalued 16 overvalued (Do not round intermediate calculations and Stock Z is points...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 30% standard...
Stock X has a 9.5% expected return, a beta coefficient of 0.8, and a 30% standard deviation of expected returns. Stock Y has a 12.0% expected return, a beta coefficient of 1.1, and a 30.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%. Calculate the required return of a portfolio that has $7,500 invested in Stock X and $5,500 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal...
Consider the Fama-French 3-factor model. The risk-free rate is 1% and the xpected return on the...
Consider the Fama-French 3-factor model. The risk-free rate is 1% and the xpected return on the market is 11%. The stock's market beta is 1, SMB beta is 0.5 and eta is -0.5. EPML) and Ers) are 6% and 7%, respectively. The stock's expected return is 12%. Relative to the Fama-French 3-factor model, the stock has and is 1) Positive alpha, undervalued 2) Positive alpha, overvalued 3) Negative alpha, undervalued 4) Negative alpha, overvalued 5) Zero alpha, Fairly valued A...
1/3). Each stock is described in the Wilson holds a portfolio that invests equally in three stocks (WA = WB Wc following table: Stock Beta Standard Deviation Expected Return A 0.5 23% 7.5% B 1.0 38% 12.0% C 2.0 45% 14.0% An analyst has used market and firm-specific information to generate expected return estimates for each stock. The analyst's expected return estimates may or may not equal the stocks' required returns. You've also determined that the risk-free rate (TRF) is...
| 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
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 Y has a beta of 1.2 and an expected return of 15.3 percent. Stock Z has a beta of 0.8 and an expected return of 10.7 percent. If the risk-free rate is 6 percent and the market risk premium is 7 percent, the reward-to-risk 7.75 and ratios for stocks Y and Z are 5.88 percent, respectively. Since the SML reward-to-risk is 7.0 percent, Stock Y is undervalued 16 overvalued (Do not round intermediate calculations and Stock Z is points...
Consider the Fama-French 3-factor model. The risk-free rate is 1% and the xpected return on the market is 11%. The stock's market beta is 1, SMB beta is 0.5 and eta is -0.5. EPML) and Ers) are 6% and 7%, respectively. The stock's expected return is 12%. Relative to the Fama-French 3-factor model, the stock has and is 1) Positive alpha, undervalued 2) Positive alpha, overvalued 3) Negative alpha, undervalued 4) Negative alpha, overvalued 5) Zero alpha, Fairly valued A...
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