Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. portfolio risk and return. forecast returns and th

Portfolio Risk and Return. Forecast Returns and the CAPM. An investment analyst has forecast the...

70.2K

Verified Solution

Question

Finance

image

Portfolio Risk and Return. Forecast Returns and the CAPM. An investment analyst has forecast the following for three stocks. R = 4% E(R ) = 12% Price E (dividend) E (price) in 1 year Stock Beta $35 Today $30 55 80 in 1 year $0.28 0.95 1.0 58 0.7 91 0.52 1.3 The analyst would like to use the above information to determine whether these stocks are overpriced, underpriced, or at their equilibrium prices? The analyst would also like to show where they plot on the Securities Market Line (SML) graph. Your report should have the following information and qualities: Include the calculation for the Forecast Return and the Required Return for Stocks A, B and C. Based on the calculation, determine whether these stocks are overpriced, underpriced or fairly priced. Support your answer. Plot the three stocks on the SML graph where the x-axis is the beta and they axis is the E(R)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

The graph of f(x)= 3x+1/8x3 will behave like which function for large values of |x|?y=...

Calculus
Q

Consider the reaction A+2B⇌C whose rate at 25 ∘C was measured using three different sets of...

Chemistry
Q

1. which of the following volumes cannot be recorded using a spirometer? a. RV b. ERV c. TLC d. all...

Biology
Q

for azo dyes, why does an instantaneous and dramatic color change occur when the two coupling...

Chemistry
Q

After distinguishing between internal and external male’s genital organs, discuss how after sperm cells are produced,...

Medical Sciences
Q

Discuss what is advantages and disadvantages of rebot teaching in Localy ,globaly and regional y?

Mechanical Engineering
Q

POPULATION Time Years A irregular B stable C exponential D cyclical The human population shown...

Biology
Q

preparation products on the market Study Focus and Prepara A researcher in the Education department...

Statistics
Q

Graph the follwing function by hand and support your sketch with a calculator graph Give...

Calculus
Q

Tremont, Inc., sells tire rims. Its sales budget and inventory, purchases, and cost of goods...

Accounting
Q

Co sider a bond paying a cou on rate f 10% per year semiannually when...

Finance
Q

A financial manager must choose between four alternative Assets: 1, 2, 3, and 4. Each...

Finance