Question: A stock has these possible returns: -10% (probablity: 50%), 0% (probablity: 15%), 5% (probability: 15%) , 10% (probablity: 20%). The inflation rate is 1.5%. What

A stock has these possible returns: -10% (probablity: 50%), 0% (probablity: 15%), 5% (probability: 15%) , 10% (probablity: 20%). The inflation rate is 1.5%. What is the real expected rate of return? (please use excel and give the rigorous answer rather than an approximate number (approximate number = expected rate return - inflation rate)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Question 1 Suppose you are a senior portfolio manager of an international investment bank that oversees a US investment portfolio with total assets of 28 billion. For company B&G Ltd., you know the...

2. A stock has these possible returns: -10% (probablity: 50%), 0% (probablity: 15%), 5% (probability: 15%) , 10% (probablity: 20%). What is the expected rate of return? Please use excel.

1.cBay, Inc., went public in September of 1998. The following information on shares outstanding was listed in the final prospectus filed with the SEC (Securities and Exchange Commission). In the IPO....

QUESTION 1 All else equal, which of the following bonds carries the greatest amount of interest rate risk? 0%coupon 5% coupon 10%coupon 20%coupon 3 points QUESTION 2 If a bond's coupon rate is more...

Choc-lattes Corp. earned $5.00 per share in 2009, and paid a dividend of $2.00 per share. If it earns $5.50 in 2010 and follows a constant payout ratio policy, its dividend will be a. $3.30 b. $3.00...

Spend analysis Stock-keeping unit (SKU) 10 Three-way match Utilization ty Images; @ monsity/ Getty Images Vendor master health care? iency? CHAPTER 17 applied, and what are the steps to fol-...

MULTIPLE CHOICE 1) Which of the following is NOT an investment as defined in the text? A) a certificate of deposit issued by a bank B) a new automobile C) a United States Saving Bond D) a mutual fund...

ID# CU68 PUBLISHED ON FEBRUARY 19, 2013 THE RICHARD PAUL RICHMAN CENTER FOR BUSINESS, LAW, AND PUBLIC POLICY AT COLUMBIA UNIVERSITY CASE SERIES Midwest Electronics Asian Expansion BY JESSE J. GREENE,...

A stock has these possible returns in the next week: -10% (probablity: 50%), 0% (probablity: 15%), 5% (probability: 15%) , 10% (probablity: 20%). The risk-free rate is 3%. What is the expected excess...

Assistance needed on filling out forms 1065 and K-1 for partnership as well as details on how to arrive at depreciation calculation and how to calculate outside and inside basis for the partners....

Please Help me complete this partnership tax return. Attached are the problem and necessary forms, including Form 1065, 1125-A, K-1, 4562, 4797, 8825, 8949, and Schedule B-1 and D of the 1065. 1065...

Show that the rth moment about the origin of the gamma distribution is 3( ) 3*T(a ()

Which of the following when used in ordinary low carbon steels, makes the metal ductile and of good bending qualities? a Sulphur b.Phosphorus c-Manganese d.Silicon

All of the following regarding payroll checks is correct except Group of answer choices access to payroll checks should be restricted. payroll checks should be drawn on the organization's regular...

Which of the following statements is FALSE regarding Contract Law? 1) In an Executory Contract one or both parties have not yet fulfilled their promises. 2) In an Executed Contract all parties have...