Question: Below you will find WEEKLY return information for 3 companies (A, B, and C) as well as for a major local index (S&P). You will
| Below you will find WEEKLY return information for 3 companies (A, B, and C) as well as for a major local index (S&P). | ||
| You will find that certain information has already been calculated for you. | ||
| Assume that you have access to a 4% lending/borrowing rate. | ||
| A. What is stock A's Jensen's Alpha? | ||
| B. Assume, for the puposes of this question, that stock B SHOULD earn a weekly return of 0.1% according to the CAPM model. | ||
| Indicate wether, according to the information just given and the information found in the table below, stock B is underpriced or overpriced. | ||
| Please select the number that corresponds to the choice from the table below. | ||
| Select One | ||
| 1 | Underpriced | |
| 2 | Overpriced | |
| NOTE: No points will be awarded for guessing. I need to be able to find your workings. | ||
| C. Assume that stock C's most recent closing price was $15.52 and that you believed that the stock would rise $15.75 by the end of the week. | ||
| You also anticipate that the company will be paying a $0.01 dividend per share at the end of the week. | ||
| i. Given the information provided in Part C, what weekly return are you expecting? | ||
| ii. Check to see if the asset is currently misspriced. If it is then find the adjusted price. If it is not simply type 0 (Zero). please just show steps to work out as I cant post data tables | ||
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