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stock is overvalued when its expected return is more than investor's required return
MEC is the highest rate of return expected from an additional unit of capital stock over its cost. MEI is the expected rate of return from one additional unit of investmeni.
What constitutes a constant growth stock is a stock that has dividends that are expected to grow at a constant rate. The formula used to value a constant growth stock is determined by the estimated dividends that will be paid divided by the difference between the required rate of return and growth rate.
Bear
The expected outcome is Profit. But, the actual outcome may be different if the stock selected was poor.
6000.00
It really depends on the future. There are several factors that can effect the return on a future. It is not that easy to determine a return.
Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)
common stock current price $90 is expected to pay a dividend of $10. Company growth rate is 11%. estimate the expected rate of return on corp stock common stock current price $90 is expected to pay a dividend of $10. Company growth rate is 11%. estimate the expected rate of return on corp stock
stock is overvalued when its expected return is more than investor's required return
A stock is expected to pay a dividend of $1 at the end of the year. The required rate of return is rs 11%, and the expected constant growth rate is 5%. What is the current stock price?
*cost *expected return *stock of capital on hand *risk
49%....in reality no stock has a beta of 7
A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price?
then it is a good buy =-) To put it simply.
Risk reflects the chance that the actual return on an investment may be very different than the expected return. One way to measure risk is to calculate the variance and standard deviation of the distribution of returns.Consider the probability distribution for the returns on stocks A and B provided below.StateProbabilityReturn onStock AReturn onStock B120%5%50%230%10%30%330%15%10%320%20%-10%The expected returns on stocks A and B were calculated on the Expected Return page. The expected return on Stock A was found to be 12.5% and the expected return on Stock B was found to be 20%.Given an asset's expected return, its variance can be calculated using the following equation:whereN = the number of states,pi = the probability of state i,Ri = the return on the stock in state i, andE[R] = the expected return on the stock.The standard deviation is calculated as the positive square root of the variance.Note: E[RA] = 12.5% and E[RB] = 20%Stock AStock B
There are unlimited number of factors that can affect the operations of stock exchanges apart from the real interest rates. A few are:- Macro and micro economic indicators of economy Currency fluctuations Corporate Earnings Inflation rate A number of factors can affect the operations of stock exchanges at any given time.