Author Question: Compaq recently adjusted the probabilities for its expected cash flows in light of the Asian ... (Read 143 times)

brutforce · **on:** Apr 25, 2021

Question 1

A year ago, you purchased IBM stock for $94 a share. Today, IBM stock is selling for $93 a share. Additionally, you just received a check for $1.20 per share. Your holding period return is
◦ 0.21%.
◦ 2.34%.
◦ -2.34%.
◦ 2.13%.
◦ 1.06%.

Question 2

Compaq recently adjusted the probabilities for its expected cash flows in light of the Asian currency crisis. It revised the probability of favorable conditions from 32% to 18% and the probability of poor earnings from 7% to 17%. Which of the following is the most likely result from this revision?
◦ It would raise expected returns.
◦ It would lower expected returns.
◦ The probabilities cannot be revised once they have been estimated.
◦ It would lower its historical return.
◦ It would have no effect on expected returns.

chloejackso · **Reply #1 on:** Apr 25, 2021

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