5. You have estimated the following probability distributions of expected future returnsfor Stocks X: productivity=0.1, 0.2, 0.4,

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Question:

5. You have estimated the following probability distributions of expected future returnsfor Stocks X:

productivity=0.1, 0.2, 0.4, 0.2, 0.1

returns = -10%, 10, 15, 20, 40

What is the expected rate of return for Stock X?

6. What would be the value of a common share were the growth rate is constant at 4% assume that the investors rate of return is 10% and the last year dividends is $4.00

7. What is the Characteristics of a Bond?

Statement1: A bond is generally a form of debt which the investors pay to the issuers for a definedtime frame.

Statement 2:Bonds generally have a fixed maturity date.

Statement 3: All bonds repay the principal amount after the maturity date; however some bonds dopay the interest along with the principal to the bond holders.

Statement 1 only

Statement 2 and 3

All statements are correct

None of the statements are correct