Question: PROBLEMS AND QUES In the problems below, use a market risk premium of 5.5%, where none is specified. 1. The following table lists the stock

PROBLEMS AND QUES In the problems below, use a market risk premium of 5.5%, where none is specified. 1. The following table lists the stock prices for Microsoft from 1989 to 1998. The company did not pay any divi- dends during the period Year Price (dollars) 1.20 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 2.09 4.64 5.34 5.05 7.64 10.97 20.66 32.31 69.34 a. Estimate the average annual return you would have made on your investment. b. Estimate the standard deviation and variance in annual returns. c. If you were investing in Microsoft today, would you expect the historical standard deviations and vari- ances to continue to hold? Why or why not

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!

In the problems below, use a market risk premium of 5.5% where none is specified. The following table lists the stock prices for Microsoft from 1989 to 1998. The company did not pay any dividends...

16. You have just run a regression of monthly returns on MAD Inc., a newspaper and magazine publisher, against returns on the S&P 500, and have arrived at the following result: RMAD = -0.05% + 1.20...

Consider the assets on Coca - Cola's balance sheet and answer the following questions: a . Looking at Coca Cola's assets on its balance sheet, which assets are likely to be assessed closest to market...

What is the present value of the projected merger benefits in Table A as of December 31, 2015? Are the projections reasonable? How does the present value of the pre-merger operational improvements...

In the problems following, use an equity risk premium of 5.5 percent if none is specified. 1. National City Corporation, a bank holding company, reported earnings per share of $2.40 in 1993, and paid...

Why is the variance 0.30 in the answer key when the std deviation is 0.30 in the question? expected dividends on the asset, the strike price and life of this value, the ance the option, in and the...

In the problems following, use an equity risk premium of 5 . 5 percent if none is specified and a tax rate of 4 0 percent where no tax rate is provided. 1 . In December 1 9 9 5 , Boise Cascade's...

Attached are the problems I need help with. Thank you In the problems following, use an equity risk premium of 5.5 percent if none is specified. 1. You are trying to estimate the trailing 12-month...

Apply z - trans form x[n] 1 0.8 O.64 0.512

The following graph contains a Hamilton cycle: True False

9. An advertisement in the local paper offers a fully loaded car that is only six months old and has only been driven 5,000 miles at a price that is 20 percent lower than the average selling price of...

10) For a bond that pays cash interest (i.e., not a zero coupon bond), YTM is (a) always equal to the coupon rate (b) always equal to the current yield (c) is always less than the coupon rate (d) can...

Visit your campus career center and gather information on interest and personality tests they offer or recommend to help individuals determine their career interests. Take one of the tests, have the...

What are the three purposes of an oral communication message? Identify a business scenario that would be appropriate for each purpose. (Objective 4)

Give emphasis to the important points in the following paragraph by varying (a) your pitch; (b) your volume; (c) your speed; and (d) your pitch, volume, and speed in appropriate combinations....