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How can one determine whether a stock is overvalued or it is undervalued?
stock is overvalued when its expected return is more than investor's required return
Relation between marginal efficiency of capital and marginal efficiency of investment?
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.
The stock of ABC Inc has a beta of 80 The market rate of return is expected to increase by by 5 Beta predicts that ABC stock should?
If ABC Inc has a beta of 0.80, it indicates that the stock is less volatile than the market. With an expected market return increase of 5%, ABC's stock is predicted to rise by approximately 4% (0.80 x 5%). This relationship suggests that while ABC is expected to benefit from the overall market increase, its gains will be more subdued compared to higher-beta stocks.
What constitutes a constant growth stock and how it is value?
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.
What is the expected outcome from investing in the stock market?
The expected outcome is Profit. But, the actual outcome may be different if the stock selected was poor.
10000 to invest in a stock portfolio. stock A expected return 18 and stock B expected return 11. create a portfolio with expected return of 16.25. how much to invest in stock A and stock B?
6000.00
What kind of return can be expected on a stock market future?
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.
Risk free rate is 5 and the market risk premium is 6 What is the expected return for the overall stock market What is the required rate of return on a stock that has a beta of 1.2?
Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)
How can you calculate internal rate of return on investment in real estat?
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
How can one determine whether a stock is overvalued or it is undervalued?
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 percent and the expected constant growth rate is 5 percent?
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?
If the risk-free rate is .06 and expected return on the market is .13. What is the requred rate of return on a stock that has a beta of 7?
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 equals 10.5 percent and the expected constant growth rate is g equals 6.4 percent?
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?
What are the factors influencing the level of investment in an economy?
*cost *expected return *stock of capital on hand *risk
If the expected rate of return on a stock exceeds the required rate then?
then it is a good buy =-) To put it simply.
How are variance and standard deviation used as measures of risk for both a security and a portfolio?
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
Assume that the risk free rate is 6 percent and the expected return on the market is 13 percent what is the required rate of return on a stock with a beta of 0.7?
14
