Suppose a three factor model is appropriate to describe the returns of a stock Information about those three factors is presented in the following chart Factor Expected Value Actual Value GDP 0008741 $14,251 $14,238 Inflation 91 4 0 3 8 Interest rates 48 7 4 7 2 a What is the systematic risk of the stock return ( Do not round intermediate calculations Negative amount should be indicated by a minus sign Round your answer to 2 decimal places (e g , 32 16)) Systematic risk of the stock return b Suppose unexpected bad news about the firm was announced that causes the stock price to drop by 1 4 percent If the expected return on the stock is 14 0 percent, what is the total return on this stock ( Do not round intermediate calculations Round your answer to 2 decimal places (e g , 32 16))

The Answer is in the image, click to view ...

Question: Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart: Factor

Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart:

Factor	?	Expected Value		Actual Value
GDP	.0008741		$14,251		$14,238
Inflation	?.91		4.0%		3.8%
Interest rates	?.48		7.4%		7.2%

a.	What is the systematic risk of the stock return? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16))

Systematic risk of the stock return

Suppose unexpected bad news about the firm was announced that causes the stock price to drop by 1.4 percent. If the expected return on the stock is 14.0 percent, what is the total return on this stock?(Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

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!

Redesign the priority encoder from Exercise 2.36 to be as fast as possible. You may use any of the gates from Table 2.8. Sketch the new circuit and indicate the critical path. What are its...

Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart: B Expected Actual Value Factor GDP Inflation...

2. Factor Models. Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those thee factors is presented in the following chart: a. What is the systematic...

Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart: Expected Factor Actual Value GDP .0008861...

7. Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart: Factor Expected Value Actual Value GDP...

Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart: Expected Value Factor Actual Value $14,254...

Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart: a. What is the systematic risk of the stock...

Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors are presented in the following chart: Please use the info on the attached word...

11.2 Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart. Suppose this is the only information...

Problem 12-2 Factor Models Suppose a three-factor model is appropriate to describe the returns of a stock. Information about those three factors is presented in the following chart: Factor GDP...

Bionic Cotton Inc. manufactures and sells high-quality sporting goods equipment under its highly recognizable Cool Cat logo. The company began operations on January 1, 2016, and operated at 100% of...

1. How do the requirements for negotiation of an instrument with a blank qualified indorsement, as was used in this case, differ from those for negotiation of an instrument with a special qualified...

How should a U.S. firm that currently exports only to ASEAN countries respond to the creation of a single market in this regional grouping?

The first scenario will be a Verbal Judo scenario in which your scenario follows the standard Verbal Judo interaction: You need to ask somebody to modify their behavior either to do something or to...

What purposes do policy manuals serve in organizations? (Objective 5)

Teamwork. George Urban and Helen Felix graduated from your school and later started their own business. Because they believed their education contributed to their success, they recently pledged...

Technology. You volunteer at a Boys and Girls Club in your community. The playground equipment at the club is old and potentially unsafe.Youve decided to explore the possibility of applying for...