Exam 10: Estimating Risk and Return

A company's current stock price is $50.00 and its most recent dividend was $2.00 per share.Since analysts estimate the company will have a 5 percent growth rate,what is its expected return?

Shares of stock issued to employees that have limitations on when they can be sold are known as

You hold the positions in the following table.What is the beta of your portfolio?

A company has a beta of 2.91.If the market return is expected to be 16 percent and the risk-free rate is 4 percent,what is the company's risk premium?

Which of these is the reward for taking systematic stock market risk?

A company has a beta of 3.25.If the market return is expected to be 14 percent and the risk-free rate is 5.5 percent,what is the company's required return?

How might a small market risk premium impact people's desire to buy stocks?

Consider an asset that provides the same return no matter what economic state occurs.What would be the standard deviation of this asset?

The Nasdaq stock market bubble peaked at 10,816 in 2000.Two and a half years later it had fallen to 4,000.What was the percentage decline?

Compute the standard deviation given these four economic states,their likelihoods,and the potential returns:

Stock A has a required return of 12 percent.Stock B has a required return of 15 percent.Assume a risk-free rate of 4.75 percent.Which of the following is a correct statement about the two stocks?

Which of these is similar to the Capital Market Line,except that risk is characterized by beta instead of standard deviation?

Compute the standard deviation of the expected return given these three economic states,their likelihoods,and the potential returns:

Netflix,Inc.has a beta of 3.61.If the market return is expected to be 13.2 percent and the risk-free rate is 7 percent,what is Netflix's risk premium?

Which of these is the set of probabilities for all possible occurrences?

You have a portfolio with a beta of 1.25.What will be the new portfolio beta if you keep 80 percent of your money in the old portfolio and 20 percent in a stock with a beta of 1.75?

The average annual return on the S&P 500 Index from 1986 to 1995 was 17.6 percent.The average annual T-bill yield during the same period was 9.8 percent.What was the market risk premium during these 10 years?

Investor enthusiasm causes an inflated bull market that drives prices too high,ending in a dramatic collapse in prices is known as

Which of the following is incorrect?

A stock has an expected return of 9.5 percent,the risk-free rate is 2 percent and the return on the market is 8 percent.What is this stock's beta?