Answer:
So since our Risk was "1.2 times" to the Risk of Market Hence Out Expected Return would also be 1.2 times.
Explanation:
Before Answering the Question , let us Understand some Important terms in simple language :
Market Excess Reture : it is basically that how much Market Return will be "Over & Above" Riskfree Rate
Beta : it shows that How much times is Risk of Our Stock in Comparison to that of Market . So We would be Expecting "that much times" Excess Return from that of "Market Excess Return"
?Now in Our Question it is Given that
Expected Excess Market Return (Rm - Rf) over next year = 11.9%
Beta of pur Stock = 1.2
\therefore Our Expected Excess Return over next year = Beta * Expected Excess Market Return
= 1.2 * 11.9%
= 14.28 %
I would highly recommend either 1. Try to use larger words that has a high vocabulary level to them. It kinda works to fill the sentences better and make them feel more whole as well as take more time to read. You could also 2. Just go back and give it another read and try to find more information on the subject. Hope that helped
Answer:
35 times
Explanation:
The price-earnings ratio is the financial ratio that compares the market price of a share with its earnings in order to determine whether the share gives earnings that makes it a good buy.
Price-earnings ratio=market price per share/earnings per share
market price per share for 2017 is $42
earnings per share=net income-dividends/average common stock outstanding
net income is $108,000
dividends is nil
average number of common stock is 90,000
earnings per share=$108,000-$0/90,000=$1.2
price earnings ratio=$42/$1.2=35 times
