exam3a.ch6 - Name __________________________________ Webct...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Name __________________________________ Webct User ID __________________________________ University of Houston C. T. Bauer College of Business Principles of Financial Management Finance 3332 Summer, 2007 Exam 3 A To receive full credit, show all workequations in variable form, equations with numbers plugged inand clearly indicate your answer. Point values are in parentheses. 1. You are analyzing a stock with a beta of 2.0. The risk- free rate is 6 percent, and the market risk premium is 1 What is the stocks equilibrium required rate of return? (6) 2. Referring to the information in #1, what is the expected return on the market? (2) 3. Given the following possible returns over the coming year for Driason, Inc., determine the stocks expected re State Probabilit y Expected Return Rec e s sion 10%-30% Normal 50% 20% Boom 40% 40% 4. What is the probability of earning a return of less than 12 percent on a stock whose returns are normally distri with an expected return of 8 percent and a standard deviation of 25 percent? (8) 5. What is the standard deviation of returns for this stock given the following historical data if its expected return percent? (8) Year Observatio n Return 2006 1-20% 2005 2 10% 2004 3 30% 2003 4 8% 6. Based on a stocks market price, you estimate a return of 15 percent. The stock has a beta of 1.6, and you ca6....
View Full Document

Page1 / 5

exam3a.ch6 - Name __________________________________ Webct...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online