Calculating beta, RR and COE

Related BrainMass Solutions

• Compute the cost of equity for Dell.

  CoE = Rf + B*(Rm - Rf), where B indicates the beta for the security.

• Required Rate of Return with a Stock in Equilibrium

  By CAPM, Required rate of return is Rr = Rf + Beta * (Rm-Rf) Rf = risk free rate Rm = Market average return rate then: 15% = Rf + 2 * (10%-Rf) 15% = Rf + 20% - 2Rf Rf = 5% When Rm increased by 30%, Rm = 10%*(1+30%) = 13% Then Rr = Rf + Beta

• Morrow Inc. stock has a beta of 1.3 Assume the capital-asset-pricing model holds. What is the expected return on Morrow's stock?

  Rr = Rf + Beta * (Rm - Rf) = 18.0 percent. You will find the answer to this puzzling question inside...

• What is all the equity cost of capital you are able to calculate

  In the US, Rf = 4%, market return rate Rm = 10% The beta = 0.90 Then by a CAPM, the required return of the project is Rr = Rf + beta * (Rm - Rf) = 4% + 0.90 *(10% - 4%) = 9.4% If the firm finance by all-equity, the cost of capital = Rr = 9.4% There

• Suppose you are given the following information

  They then added two factors to CAPM to reflect a portfolio\'s exposure to these two classes: Rr = beta *( Rm - Rf ) + c * SMB + d * HML + Rf Here Rr is the portfolio\'s return rate, Rf is the risk-free return rate, and Rm is the return of the whole

• Assume that company A has a beta coefficient of 1.2, that the risk free rate is 7.0 % and that the market risk premium is 5 percent. What is the required rate of return on the firm's stock?

  By CAPM, we know: Rr = Rf + Beta * Risk Premium = 7% + 1.2*5% = 13% 2. Assume that company A is a constant growth company whose last dividend which was paid yesterday as $2.00 and whose dividend is expected to grow indefinitely at a 6% rate.

• Graham Enterprises Stock Price

  The risk-free rate is 6 percent, the market rate is 5 percent, and the company's beta equals 1.2 What is the expected price of the stock 5 years from now?

• Sustainable Growth Rate

  rate = ROE x Retention rate (RR) / (1-ROE X RR) ROE= 20.216% d=payout ratio= 40% retention ratio = RR = 1- payout ratio=(1-d)= 60% sustainable growth rate = ROE x Retention rate (RR) / (1-ROE

• Singapore Certificate of Entitlement

  As expected both previous COE price and exchange rate has an influence on the COE prices and both have negative impact. The lag between the COE prices and historical COE price and exchange rate is 2 months as against the normal period of one month.