Semitool Corp. has an expected excess return of 10% for next year. However, for

Question

Semitool Corp. has an expected excess return of 10% for next year. However, for every unexpected 1% change in the market, Semitool's return responds by a factor of 1.1 Suppose it turns out that the economy and the stock market do better than expected by 9% and Semitool's products experience more rapid growth than anticipated, pushing up the stock price by another 6%. Based on this information, what was Semitool's actual excess return? Note Express your answers in strictly numerical terms For example, if the answer is 5%, write 0 05"

Explanation / Answer

Semitool's actual excess return = 0.10 + [1.1 * 0.09] + 0.06

= 0.10 + 0.099 + 0.06

= 0.259

Conclusion:- Semitool's actual excess return = 0.259 [ 0.259 can also be written as 25.90 %]

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