help on 4-5 4 GE Corporation\'s stock sells for $30 per share and has a beta of

Question

help on 4-5 4 GE Corporation's stock sells for $30 per share and has a beta of 2. Other factors being constant, if the market goes up to 10 percent, GE stock will advance to A. $33 B. C. S36 $60 D. none of the above; the correct answer is 5. Given the following expected returns and standard deviations of assets B, M, Q, and D, which asset should the prudent financial manager select? Asset Expected Return Standard Deviation 15% 1496 12% 5% 10% 9% A. Asset B B. Asset M C. Asset Q D. Asset D 0 PAGE O 10

Explanation / Answer

GE corporation Stock Beta is 2 and market beta is 1.This means If market changes by 1% GE corporation stock will change by 2%.

Market goes up by 10% therefore GE corporation Stock will goes up by 20%.

GE corporation Stock price = 30*120% =$36

Answer B

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