Consider the following multifactor(APT) model of security returns for a particular stockFACTOR FACTOR BETA FACTOR RISK PREMIUMinflation 1.1 9%industrial production 0.7 11oil prices 0.3 7

If t-bills currently offers a 6% yield, find the expected rate of return on this stock, if the market views the stock as fairly priced.Expected rate of return: ?Suppose that the market expected the values for the three macro factors given in column 1 below, but the actual values turns out as given in column

Don't use plagiarized sources. Get Your Custom Essay on
Just from $13/Page
Order Essay

2. Calculate the revised expectations for the rate of return on the stock once the “surprises” become known.FACTOR EXPECTED RATE OF CHANGE ACTUAL RATE OF CHANGEinflation 7% 3%industrial production 6 7oil prices 4 0 Expected rate of return: ?

Alpha and Pricing The risk free rate is 1.7% and the market price of risk is 5.5%. A stock with a beta of 1.2 has an expected dividend yield of 5% and an expected capital gain of 4%. This stock’s alpha is equal to ______ and the stock is ________.-9.55%; underpriced0.7%; underpriced+9.55%; overpriced-0.7%; overpriced

Place Order
Grab A 14% Discount on This Paper
Pages (550 words)
Approximate price: -
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Try it now!

Grab A 14% Discount on This Paper

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.