Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $59. The stock will pay a dividend at year-end of $4.00. Assume that risk-free Treasury securities currently offer an interest rate of 1.6%. - Essay Prowess

Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $59. The stock will pay a dividend at year-end of $4.00. Assume that risk-free Treasury securities currently offer an interest rate of 1.6%.

Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $59. The stock will pay a dividend at year-end of $4.00. Assume that risk-free Treasury securities currently offer an interest rate of 1.6%.

Average rates of return on Treasury bills, government bonds, and common stocks, 1900–2017 (figures in percent per year) are as follows.

PortfolioAverage Annual

Rate of Return (%)Average Premium (Extra return

versus Treasury bills) (%)Treasury bills 3.8 Treasury bonds 5.3 1.5 Common stocks 11.5 7.7

a. What is the discount rate on the stock? (Enter your answer as a percent rounded to 2 decimal places.)

b. What price should she be willing to pay for the stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Consider the following scenario analysis:

Rate of ReturnScenarioProbabilityStocksBondsRecession0.2-4%15%Normal economy0.716 11 Boom0.125 3

Assume a portfolio with weights of 0.60 in stocks and 0.40 in bonds.

a. What is the rate of return on the portfolio in each scenario? (Enter your answer as a percent rounded to 1 decimal place.)

b. What are the expected rate of return and standard deviation of the portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Consider the following two scenarios for the economy and the expected returns in each scenario for the market portfolio, an aggressive stock A, and a defensive stock D.

Rate of ReturnScenario Market Aggressive

Stock A Defensive

Stock D Bust –8% –11% –6% Boom 30 40 24

Required:a. Find the beta of each stock.b. If each scenario is equally likely, find the expected rate of return on the market portfolio and on each stock.c. If the T-bill rate is 3%, what does the CAPM say about the fair expected rate of return on the two stocks?d. Which stock seems to be a better buy on the basis of your answers to (a) through (c)?

Order your Copy Today

Our Services Our services Our services Our Services
Custom Research Papers
Sample papers
Custom Term Paper
Descriptive Essays
Dissertation Abstract
Dissertation Help
Dissertation Proposal
Dissertation Topic
Dissertation Writers
Dissertation Writing Service
Do My Essay
Do My Essay For Me
Do My Paper
Doctoral Dissertation
Editing  Writing
Essay Help
Essay Outline
Essay Topics
Essay writers
APA style
Plagiarism Checker
gantt maker
Essay Editing Services
Essay questions
Buy Essays Online
Buy Term Paper Online
Write My Essay
Do my homework for me
Academic papers
Admission Essay Writing
APA Style Paper
Assignment Services
Book Review
Business Essay
Business Report
Buy custom essay
Case Study Services
Cheap essays
Cheap Research papers
Chicago Style Papers
Essay Writing Service
Capstone Project 
Citation Generator
Buy Term Paper Online
Literary analysis essay
Application essay writing
Argumentative essay
Cause and effect essays
Compare and Contrast essay
Critical Analysis Essay
Article critique
Assignment help
Biology paper
Buy college papers
Buy Dissertations
Buy Essays online
Buy projects
College Essays
College papers
College Term Papers
Essays for Sale
GCSE coursework
Research Papers
Research paper topics 
Term Paper Writing
Definition essay
Descriptive essay
Expository essay
Five paragraph essay
Narrative Essay
Personal Essay writing
Scholarship Essay
Reports 
Powerpoint
Economic Essay
Buy Essay
Online Writing Services
Buy Cheap Essays
Coursework Help
Course Work Writing
Critical Essay Writing
Custom Essay
Free Essays
Free Term Papers
Grammarly Checker
Turnitin plagiarism checker
error: yourclasshelper@gmail.com