You expect the risk-free rate (RFR) to be 5 percent and the market return to be 12.2 percent. You also have the following information about three stocks Current Expected Expected Stock Beta Price Price Dividend X 1 26 26 0.75 Y 2 41.5 44 1.50 Z 2 50.00 58 0.95 What are the expected (required) r
17. The expected return on the market is 13% and the risk-free rate is 5%. Your portfolio has a beta of 1.3. What is the expected return on your portfolio? 18. What is the beta of the following portfolio? 40% Stock A Beta = 1.2 30% Stock B Beta = 1 30% Stock C Beta = 0.9 19. The more __________
The market portfolio is assumed to be composed of two securities, investment X and investment Y. Determine based on the information given the average return, standard deviation and coefficient variation. Which is the better investment? Year Return X Return Y 1997 16.5% 17.5% 1998
If the market required rate of return is 14% and the risk-free rate is 6%, what is the fund's required rate of return?
Suppose you are the money manager of a 4 million investment fund. The fund consists of 4 stocks with the following investments and betas. Stock A 400,000 beta 1.50 Stock B 60,000 beta (0.50) Stock C 1,000,000 beta 1.25 Stock D 2,000,000 beta 0.75 If the market required rate of return is 14% and t
If you require a 14 percent return on this stock, what will you pay for a share today? See attached file for full problem description.
If the required return of Warf stock is 13 percent, what will a share of stock sell for today. See attached file for full problem description.
1. The Carter Company's bonds mature in 10 years have a par value of $1,000 and an annual coupon payment of $80. The market interest rate for the bonds is 9%. What is the price of these bonds? a. $935.82 b. $941.51 c. $958.15 d. $964.41 e. $979.53 2. Bauer Inc's bonds currently sell for $1,275 and have a par value of
In 3 or 4 sentences: How do you determine what your rate of return should be when you invest in a property?
Calculate the portfolio's expected return and standard deviation if Andy invests 20% in stock A, 50% in stock B, and 30% in stock C. Assume that each security's return is completely uncorrelated with the returns of the other securities.
Andy Castaneda owns 3 stocks and has estimated the following joint probability distribution of returns: Outcome Stock A Stock B Stock C Probability 1 -10 10 0 0.30 2 0 10 10 0.20 3 10 5 15 0.30 4 20 -10 5 0.20 Calculate the portfolio's expected return and standard deviation if Andy invests 20% in stock
A steel comapny is the using the capital asset pricing model to evaluate a possible investment project. The proposed project involves an investment of 15.2 million to start uo a toy manufacturing plant. the proposed project has about the same risk as the maerket(beta=1) and a project return of 30 percent. Additionally, the pr
Security A has an expected rate of return of 0.10 and a beta of 1.1. The market expected rate of return is 0.08 and the risk-free rate is 0.05. What is the alpha of the stock?
The risk-free rate is 7 percent. The expected market rate of return is 15 percent. If you expect stock X with a beta of 1.3 to offer a rate of return of 12 percent, should you buy this stock or short sell it? Why?
The expected standard deviation of market returns is 0.20. Sandra has the following four stocks: Security Standard Dev. Correlation with the Market A .30 .70 B .75 .30 C
A. For a profitable firm in the 35% marginal tax bracket with $100,000 of annual depreciation expense, what would the depreciation tax shield be? B. What dividend is paid on preferred stock if investors require a 9% rate of return and the stock has a market value of 54% per share and a book value of $50.00 per share? C. W
Hi, I need some help calculating covariance b/w 5 investments and market to obtain beta. Please see directions and attached spreadsheet. --- COULD SOMEONE SHOW ME HOW TO CALCULATE THE COVARIANCE AND BETA FOR THE DATA ON THE ATTACHED SPREADSHEET. A CHECK POINT TO MAKE SURE WE ARE ON THE SAME PAGE IS THAT THE 10-YR BETA FOR
Identify two important components that comprise the required return for an investment in corporate securities
Given a positive real rate, identify two important components that comprise the required return for an investment in corporate securities.
Biogenetics, Inc. plans to retain and reinvest all of their earnings for the next 30 years. Investors believe that in the beginning of year 31, the firm will begin to pay a dividend of $12.00 per share. The dividend is expected to remain at the same level thereafter. Given a required return of 15%, what should the stock sell
I need help figuring out what formulas to use so that I can understand how to compute the rate of return on the following questions. Please help with these multiple choice questions. What is the rate of return for an investor who pays $1,054.47 for a three-year bond with a 7% coupon and sells the bond one year later for $1,03
1) Storico Co. just paid a dividend of $3.50 per share. The company will increase its dividend by 12 percent next year and will then reduce its dividend growth rate by 3 percentage points per year until it reaches the industry average of 3 percent dividend growth, after which the company will keep a constant growth rate, forever
Thank you for your assistance on the following hypothetical example. Suppose you have invested $30,000 in the following four stocks: Security Amount Invested Beta Stock A $5,000 0.75 Stock B $10,000 1.1 Stock C $8,000
Hi, THese are pretty basic problems just need some guidance! Thanks! 1. 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? 2. Assume that company A is a constant growth company wh
Please help with the following problems. The beta coefficient for stock C is bC= .4, whereas that for stock D is bD= -.5. Stock D has a negative indicating that its rate of return rises whenever returns on most other stocks fall. 1. If the risk free rate is 9 percent and the expected rate of return on an average stock
What is the risk premium and beta for a 3 month T-bill?
If MSFT's next years dividend is expected to be 4.00 and the growth rate of the dividend is expected to be 14% forever, then what is the required rate of return for the stock given if it is currently trading at $30 a share.
BACKGROUND: Ponza International has three divisions. One is engaged is leisure wear, one in graphics, and one in household paint. The company has identified proxy companies in these lines of business whose stocks are publicly traded. Neither Ponza International nor the proxy companies employ debt in their capital structures
Briefly describe Sears, Roebuck and Co. Give three examples of responsibility centers for Sears, Roebuck and Co.. Describe how these responsibility centers interact.
An investment of $20 in Stock A is expected to pay no dividends and have value of $24 in 1 year. An investment of $70 in Stock B is expected to generate a $2.50 dividend next year and price of its stock is expected to be $78. 1) What are the expected returns 2) If the required return is 10%, which stock(s) should be profit
An investment fund has total capital of $500 million invested in 5 stocks: STOCK INVESTMENT STOCK'S BETA COEFFICIENT A $60 million 0.5 B $120 million 2.0 C $80 million 4.0 D $80 million 1.0 E $60 million 3.0 The beta coefficient for the fund can be found as a we
Estimate expected returns and find the beta and the return on the fund. 1. You use a factor model to estimate expected returns on Daemon stock. The risk-free rate is 3%. You have the following information: Factor Factor Beta Risk Premium GNP .80 .49% Inflation 1.20 -.83% Market .45 6.36% 2. Honest Dave's Used Mu