If the market return is expected to be 1350 percent and the


1. Which of the following is the same synthetic position as short stock, long call?

2. Suppose Paycheck, Inc., has a beta of 0.96. If the market return is expected to be 13.50 percent and the risk-free rate is 4.50 percent, what is Paycheck’s risk premium? (Round your answer to 2 decimal places.)

3. Suppose Universal Forest’s current stock price is $58.00 and it is likely to pay a $0.60 dividend next year. Since analysts estimate Universal Forest will have a 4.8 percent growth rate, what is its required return? (Round your answer to 2 decimal places.)

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Financial Management: If the market return is expected to be 1350 percent and the
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