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Category > Business & Finance Posted 15 Jul 2017 My Price 6.00

Suppose a factor model is appropriate to describe the returns

Suppose a factor model is appropriate to describe the returns on a stock. Information about those factors is presented in the following chart.

Factor

Beta of Factor

Expected Value (%)

Actual Value (%)

Growth in GNP

2.04

3.5%

4.8%

Interest rates

-1.90

14.0

15.2

Stock return

  

10.0

  

a. What is the systematic risk of the stock return?

b. The firm announced that its market share had unexpectedly increased from 23 percent to 27 percent. Investors know from their past experience that the stock return will increase by 0.36 percent per an increase of 1 percent in its market share. What is the unsystematic risk of the stock?

c. What is the total return on this stock?

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Status NEW Posted 15 Jul 2017 09:07 AM My Price 6.00

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