Question

can anyone solve the answer with exolanation ?

For Consider the following scenario analysis and answer the following 3 questions: Economy Probability Return on Stock A Good 1/3 28% Normal 1/3 12% Bad 1/3 -7% Return on Stock B -3% 7% 17% 12. What are the expected return and standard deviation of stock A? A) 13.5% and 3.5% B) 14.5% and 11% C) 11% and 14.3% D) 10% and 13.3% 13. . 14. What are the expected return and standard deviation of stock B? 4 A) 7% and 8.2% B) 17% and 6.5% C) 7% and 9.0% to * Correlation colofficient calculate ? Covaru oner Grott and Perrin, Inc. has expected earnings of $5 per share for next year. The firm's ROE is 20% and its earnings retention ratio is 70%. If the firm's market capitalization rate is 15%, what percentage of its share price is attributed to the present value of its growth opportunities (PVGO)? A) 22% B) 80% C) 75% D) 78%

Answer 1

Page No.: Page No.: 412 Cele. Standard deviations Eupected Proble) Retian / Rally) GRAJI R A-ERA 8939 3 25 9 .33 17 0.83113 12 14 -2.33 -18 Retuin of Shoula [RA-ER ² SLA-ERD? 289 0.33 324 204.66 11 So Expected retuule ERA. P = - Variance - SERA-ERAP = 204.66 - Standard Revietian - J Vaulance 204.66 - 14:37 Se Option -C) 913) Cl. S.D & ER of Stock -13 Proble) Return T[ka) (Ra) (P) Ro-ERB (Ro-ERE)? [Re-ER)(P) - 33.333 7. 1/3 2.33 1 5.67 7 Eupected Return, ERG - ERB. P] - 77 33.333 66.67 - Variana Ella ERA] ² P - 66.67 Standard Derichian - 66.67 Variance - 8.2 y I Se Option A

Page No.: - 014 Growth Retelg ROEx . 2o4. * =147. Dindend for next year, D Retention 20%. Retio - -$54 x 11-701.) Celculeting Growth Current a line of Model: stock wing Dividend ko Costa Equity | Marker Mapiletizetion Rete, ke-15%. tee Po 15 0.15-0.14 $ 150 001 lo= Now we will celculete Pucco, . - Puco = Current Price - Canning Corg Equity - 15o - S 0-15 $ 116.67 = So, ach Percentage & is show to the present velue of opportunities - 116.67 price its is attributed growth 150 = 7825 So, I Option-D]

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