Stock ABC has four possible returns in the next week: -10% (probability: 50%), 0% (probability: 15%), 5%

Fantastic news! We've Found the answer you've been seeking!

Question:

Stock ABC has four possible returns in the next week: -10% (probability: 50%), 0% (probability: 15%), 5% (probability: 15%) , 10% (probability: 20%).The risk-free rate is 3%. What is the expected excess rate of return of ABC?

Related Book For answer-question

Auditing And Assurance Services An Integrated Approach

ISBN: 9780137879199

18th Edition

Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan

See More Books

Posted Date: Mar 04, 2024 11:01 PM

See More Questions

13. What is a lower bound for the price of 3-month call option on a non- dividend-paying stock when the stock price is $50, the strike price is $45, and the 3-month risk-free interest rate is 8%?...
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
What is the NPV for the following project cash flows at a discount rate of 15%? C0=-1,000, C1=700, C2=700 SOB Floor Company has a risk premium of 21% and a beta of 3. If the risk free rate is 3%,...
Use a calculator to express each number in Problems 39 and 40 as a decimal to the capacity of your calculator. Observe the repeating decimal representation of the rational numbers and the non...
Go to the Yahoo! Industry Center at biz.yahoo.com/ic/, choose an industry from amongst the "Top Industries" listed in the left column, and choose three of the leading firms for that industry: What...
Suppose a consumer has $120/week to spend on two consumer goods, good x and good y. (a) Illustrate the weekly budget lines (with x on the horizontal and y on the vertical axis) under two price...
Crystal Clean Ltd produces a dishwashing liquid. At the beginning of January, 63 000 litres of liquid cleaner were in process, 100% complete as to raw materials and 40% complete as to conversion...
Create a context diagram for a real estate agent trying to create a system that matches buyers with potential houses.
Accounts Payable Accounts Receivable Cash B Bland Media Information: E $ 25,000 210,000 Rent Expense Supplies $ 75,000 9,000 146,000 Supplies Expense 12,000 Common Stock 35,000 Taxes Expense 10,000...
For the analysis and procedure (Step 5 and 6) this needs to be calculated using figure 5. Results for Step 2 (procedure and analysis): Results for Step 3/4: Question 1: Deflection of a beam due to...
Find a power series solution of the differential equation (x + 2)y" + xy' - y = 0 about the ordinary point x = 0.
B. The flow of a river of 21.25 m/sec produces a total brake power of 5400 KW. It is proposed to install two turbines, one of which is twice the capacity of the other. The efficiency and specific...
8.2 Fixed temperature points in the International Temperature Scale are phase equilibrium states for a variety of pure substances. Discuss the conditions necessary within an experimental apparatus to...
(a) Use determinants to determine whether S = {(1, 3, 2), (3, 2, 2), (16, 29,4)} in a linearly indepentent set of vectors. -
A 20-mm-diameter rod made of the same material as rods AC and AD in the truss shown was tested to failure and an ultimate load of 140 kN was recorded. Use a factor of safety of 3.0. 1.5 m A B 3 m C...
F sin wt Determine the steady-state solution to the problem shown in the figure. The system wwwmmww k is subjected to a harmonic force Fsin(at) at one mass. 1x2
All of the following refer to bolts with a mean length of 5.0 inches and standard deviation of 0.1 inches. Note: The standard deviation throughout this problem is 1/10 of an inch, not one inch. A)...
Apply Jacobis method to the given system. Take the zero vector as the initial approximation and work with four-significant-digit accuracy until two successive iterates agree within 0.001 in each...
Takema Yost & Co., a medium-sized CPA firm, was engaged to audit Stuart Supply Company. Several staff were involved in the audit, all of whom had attended the firms in-house training program on...
What are the steps of the audit sampling process that differ across statistical and nonstatistical sampling approaches? In what ways do they differ?
On February 17, 2024, a CPA completed all the evidence gathering procedures on the audit of the financial statements for the Buckheizer Technology Corporation for the year ended December 31, 2023....
a. Assume that $y_{1}, \ldots, y_{n}$ are i.i.d. with a negative binomial distribution with parameters $r$ and $p$. Determine the maximum likelihood estimators. b. Use the sampling mechanism in...
For the data in Table 12.1, confirm that the Pearson statistic in equation (12.3) is 41.98 . Table 12.1 (12.3) Count Observed (j) (nj) Fitted Counts Using the Poisson Distribution (np;) 01234 6,996...
Show that the log-likelihood in equation (12.2) has a maximum at $\widehat{\mu}=\bar{y}$. n L() Inf(y,) = (-+y; In - In y;!). i=1 i=1 (12.2)

Stock ABC has four possible returns in the next week: -10% (probability: 50%), 0% (probability: 15%), 5%

Question:

Expert Answer:

To calculate the expected excess rate of return of Stock ABC we need to subtract the riskfr... View the full answer

Auditing And Assurance Services An Integrated Approach

Students also viewed these finance questions