Using CAPM what is the rate of return for LCD\'s common stock? If LCD common sto
ID: 2647921 • Letter: U
Question
Using CAPM what is the rate of return for LCD's common stock? If LCD common stock expects to pay a dividend of $5.15 next year, what would you expect the stock to trade for In one year? What is the present dividend for preferred stock? What Is LCD's weighted-average cost of capital? What is the real return received by an investor when inflation averaged 6.0% and the nominal rate of returr is 5.5%? Given you have 25% of a portfolio invested in stock A with rA = 12%, 40% invested in stock B with rB = 10%, and 35% invested in Treasury bills earning 2%. What is the weighted return of the portfolio? Given you have a portfolio with 15% of invested in stock A with a beta of 1.2, 50% invested in stock B wit beta of 1.8, and 35% invested in stock C with a beta of 0.6. What is the weighted beta of the portfolio? Beta is a measure of the sensitivity of a stock's price to the prices in the market.Explanation / Answer
Que 14, 15, 16, 17( require more information)
18) Real Return= Nominal return- inflation
= .055-.06
= -.05%0r -.47%
19) Weighted Return on Portfolio= Weight of stock A x Return on stock A + Weight of stock Bx Return on stock B+ weight of Treasury Bills x return on treasury bill
= .25x.12 +.40x .10 + .35x.02 = .03+.04+.007= 7.7%
20)Weighted Beta on Portfolio= Weight of stock A x Beta of A + Weight of stock Bx Beat of stock B+ Weight of stock C x Beta of Stock C
= .15x1.2+ .50x1.8 + .35x.6 =.18+.9+.21 = 1.29
21) False ( Beta is a measure of systematic risk)