Suppose the cells A5, A6, A7 contain the possible return of three stocks and the cells B5, B6, B7 contain the corresponding probabilities. Write the exact SUMPRODUCT function you would enter to compute the expected return of this stock.
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Suppose the cells A5, A6, A7 contain the possible return of three stocks and the cells...
Suppose that the average excess return on stocks is 12.00% and that the risk-free interest rate is 3.00%. Compute expected returns to stocks with each of the following beta coefficients using the capital asset pricing model (CAPM): Hint: Do not forget to enter the minus sign if the value of the return to stock is negative.) Return to Stocks (%) 0.7 0.2 1.0 2.0 Based on the CAPM and your calculations for the return to stocks, what does it mean...
The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Expected Dividend $0 Expected Capital Gain $10 Stock 10 a. If each stock is priced at $170, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 35% (the effective tax rate on dividends received by corporations is 10.5%), and (iii) an individual with an effective...
(a) Suppose that there are many stocks in the security market and that the characteristics of Stocks A and B are given as follows Stock A B Expected Return Standard Deviation 10% 5% 15% 10% Correlation =-1 Suppose that it is possible to borrow at the risk-free rate, If. What must be the value of the risk-free rate? Explain. HINT!!! The stocks are perfectly negatively correlated. (b) Calculate the expected return and standard deviation of an equally weighted portfolio of...
The expected pretax return on three stocks is divided between dividends and capital gains in the following way! Expected Expected Stock Dividend Capital Gain $10 50 Required: o. If each stock is priced at $195, what are the expected net percentage returns on each stock too) a pension fund that does not pay taxes, a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (ii) an individual with an effective tax rate...
You are given the information on three stocks. Stock Expected Return Number of Shares Stock Price Beta A 9% 750 $33 1.5 B 14% 220 $51 1.2 C 12% 460 $19 0.95 Suppose you borrow 70% of your funds at 6% interest rate and invest the borrowed funds as well as the funds you already have in the portfolio incorporating the three stocks. What is the expected return on this portfolio? a. 12.914% b. 14.228 c. 16.65% d. 10.80% e. ...
The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gain A $ 0 $ 10 B $5 $5 C $10 $0 a. If each stock is priced at $105, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21%.(the effective tax rate on dividends received by corporations is 6.3%,...
The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gain A $0 $10 B 5 5 C 10 0 a. If each stock is priced at $110, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 35% (the effective tax rate on dividends received by corporations is 10.5%), and...
Consider the following information about three stocks: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .20 .28 .40 .56 Normal .45 .22 .20 .18 Bust .35 .00 −.20 −.48 a-1 If your portfolio is invested 30 percent each in A and B and 40 percent in C, what is the portfolio expected return? (Do not round intermediate calculations. Enter your answer as a percent rounded...
The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gain A $0 $10 B $5 $5 C $10 $0 a) If each stock is priced at $120, what are the expected net percentage returns on each stock (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 35% (the effective tax rate on dividends received by corporations at 10.5%), and (iii)...
Consider the following information about three stocks: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .20 .28 .40 .56 Normal .45 .22 .20 .18 Bust .35 .00 −.20 −.48 a-1 If your portfolio is invested 30 percent each in A and B and 40 percent in C, what is the portfolio expected return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2...