What is the required return on a stock of 11?
=10.2% A stock has a required return of 11%, the risk-free rate is 3%, and the market risk premium is 3%. What is the stock's beta? Round your answer to two decimal places.
How do you calculate the expected return of a stock?
Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places. Expected Return = (0.1(-0.28) + 0.1(-0.13) + 0.5(0.12) + 0.1(0.29) + 0.2(0.63) Expected Return = 0.174
When is the change in required rate of return greater?
I. If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium. II. If the stock's beta is greater than 1.0, then the change in required rate of return will be less than the change in the market risk premium. III.
What is the distribution of a stock's returns?
Created by N1069544 Terms in this set (21) A stock's returns have the following distribution: Demand for the Company's Products Weak Probability of this Demand Occurring 0.1 Rate of Return If This Demand Occurs (28%) (13) Below average Average Above average Strong 0.5 0.1 Assume the risk-free rate is 2%.
What is expected return theory?
that can take any values within a given range. The expected return is based on historical data, which may or may not provide reliable forecasting of future returns. Hence, the outcome is not guaranteed.
Is tossing a coin a discrete distribution?
Tossing a coin has two possible outcomes and is thus an example of a discrete distribution. A distribution of the height of adult males, which can take any possible value within a stated range, is a continuous probability distribution. Expected Return.
Is expected return a predictor of stock performance?
Although not a guaranteed predictor of stock performance, the expected return formula has proven to be an excellent analytical tool that helps investors forecast probable investment returns and assess portfolio risk and diversification.