You Have Been Given the Following Historical Data on XYZ

question 113

Essay

You have been given the following historical data on XYZ Corporation:
$\begin{array} { c c c } \text { year } & X Y Z \text { return } & \text { market return } \\\hline1986 & 20 \% & 30 \% \\1987 & - 15 \% & - 10 \% \\1988 & 25 \% & 10 \% \\1989 & - 20 \% & - 10 \% \\1990 & 40 \% & 20 \%\end{array}$
a. Estimate the beta for XYZ.
b. The price of XYZ stock was $50 a year ago, and today it is $55. The dividends paid by XYZ over the last twelve months amount to $3. The T-bill rate a year ago was 6%, and the NYSE index has risen 10% over the past year. Assume that the average dividend yield on all stocks is 3% and evaluate the performance of XYZ stock over the past year.
c. If the T-bill rate today is 5.5%, what would you project the price of XYZ stock to be a year from today? (Assume that XYZ will continue to pay an annual dividend of $1.)

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Definitions:

Precordial Electrode

Precordial electrodes are used in electrocardiography (EKG/ECG), placed on the chest area to record heart’s electrical activity from different angles.

Intercostal Space

The physical space between two ribs, which contains muscles, nerves, arteries, and veins.

Middle of the Armpit

The central region within the armpit area, anatomically known as the axilla.

Electrocardiograph

An instrument that measures and displays the waves of electrical impulses responsible for the cardiac cycle.