# Ba350 week 7 ( ba/350 week 7 ) ( ba 350 week 7 )

BA350 Week 7

Questions

6-3 – Security A has an expected return of 7%, a standard deviation of returns of 35%, a correlation coefficient with the market of -0.3, and a beta coefficient of -1.5, Security B has an expected return of 12%, a standard deviation of returns of 10%, a correlation with the market of 0.7, and a beta coefficient of 1.0. Which security is riskier? Why?

7-2 – Two investors are evaluating General Electric’s stock for possible purchase. They agree on the expected value of D_{1 }and also on the expected future dividend growth rate. Further, they agree on the risk of the stock. However, one investor normally holds stocks for 2 years and the other normally holds stocks for 10 years. On the basis of the type of analysis done in this chapter, they should both be willing to pay the same price for General Electric’s stock. True or false? Explain.

Problems

6-2 – (Required rate of return)

– Assume that the risk-free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock that has a beta of 0.7?

6-6 – (Required rare of return)

– Suppose r_{RF }= 5%, r_{M} = 10%, and r_{A} = 12%.

A. Calculate Stock A’s beta.

B. If Stock A’s beta were 2.0, then what would A’s new required rate of return?

C.

7-1 – (DPS Calculation)

– Thress Industries just paid a dividend of $1.50 a share (i.e., D_{0} = $1.50). The dividend is expected to grow 5% a year for the next 3 years and then 10% a year there-after. What is the expected dividend per share for each of the next 5 years?

–

7-8 – (Preferred stock rare of return)

– What is the nominal rate of return on a preferred stock with a $100 par value, a stated dividend of 8% of par, and a current market price of (a) $60, (b) $80, (c) $100, and (d) $140?

**BA/350 Week 7**

** **

**BA 350 Week 7**

** **

**BA350 Week 7**

** **

** **

**U can also download BA/350 Week 8 Final Exam Sum and Case study.Just click on below Link**

** **

http://www.homeworkmarket.com/content/ba350-week-8-final-exam-ba350-week-8-final-exam-ba-350-week-8-final-exam

http://www.homeworkmarket.com/content/ba350-week-8-case-study-solution-ba350-week-8-case-study-solution

## We've got everything to become your favourite writing service

### Money back guarantee

Your money is safe. Even if we fail to satisfy your expectations, you can always request a refund and get your money back.

### Confidentiality

We don’t share your private information with anyone. What happens on our website stays on our website.

### Our service is legit

We provide you with a sample paper on the topic you need, and this kind of academic assistance is perfectly legitimate.

### Get a plagiarism-free paper

We check every paper with our plagiarism-detection software, so you get a unique paper written for your particular purposes.

### We can help with urgent tasks

Need a paper tomorrow? We can write it even while you’re sleeping. Place an order now and get your paper in 8 hours.

### Pay a fair price

Our prices depend on urgency. If you want a cheap essay, place your order in advance. Our prices start from $11 per page.