Question: Can you please further explain the correct answer (Answer A) 31) You consider buying a share of stock at a price of $32. The stock

Can you please further explain the correct answer (Answer A)

31) You consider buying a share of stock at a price of $32. The stock is expected to pay a dividend of S1.48next year, and your advisory service tells you that you can expect to sell the stock in 1 year for $35. The stock's beta is 0.7 , rf 5%, and E[rm]=15% What is the stock's abnormal return? A) 2% B) 7% C) 5% D) 0% Answer is A

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!

Hello, Please help with this Finance Investment question ! Question) Suppose you consider buying a share of stock at $40. The stock is expected to pay $3 dividends next year and you expect it to sell...

please don't use excel or software to solve it ) You consider buying a share of stock at a price of $25. The stock is expected to pay a dividend of $1.50 next year, and your advisory service tells...

please help quick will thumb answer You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $2.00 a share at the end of the year (D1 = $2.00) and has a...

answer all Makeover Inc. believes that at its current stock price of $16.00 the firm is undervalued in the market. Makeover plans to repurchase 2.4 million of its 20 million shares outstanding. The...

please answer 9, 21, 23, 25, 28. show work/explanation please. will upvote! thank you in advance! about the effect of B on portfolio return? 9. What must be the beta of a portfolio with E(rp) = 20%,...

Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. Suppose also that the expected return required by the market for a portfolio with a beta of 1 is 7.0%....

please solve 21, 23 showing work/explanation. will upvote, thank you in advance! Part TWO Portfolio Theory In Problems 21-23 below, assume the risk-free rate is 8% and the expected rate of return on...

Suppose you consider buying a share of stock at a price of $100. The stock is expected to pay a dividend of $9 next year and to sell then for $103. The stock risk has been evaluated at B = -0.5. c-1....

Please show your work and no excel please! Problem 7-25 Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. Suppose also that the expected return required...

help me please i onlu need c-1 c-2 and c-3 Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. Suppose also that the expected return required by the market...

Refer to Exercise 4.40. a. Are events A and B independent? b. Are events A and B mutually exclusive? Exercise 4.40 An experiment can result in one of five equally likely simple events, E1, E2, . . ....

Multi-Earnings Company' had the following different patterns of net income based on different accounting policies and estimates/assumptions. These differing net incomes were the result of using...

1 . The Translation Risk due to the functional currency of our international subsidiaries is generally the applicable local currency. Our consolidated financial statements are presented in U . S ....

Regarding CSS style rules which of the following best describes a property?