Explore BrainMass
Share

Explore BrainMass

    Beta and Required Return of a Project

    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

    Capital asset pricing

    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

    Calculate your portofolio's new beta

    Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio beta is equal to 1.12. Now, suppose you have decided to sell one of the stocks in your portfolio with a beta equal to 1.0 for $7,500, and use these proceeds to buy another stock for your portfolio. A

    Foreign Market Beta

    Suppose that the standard deviations of the British and U.S. stock markets have risen to 38 percent and 22 percent, respectively, and the correlation between the U.S. and British markets has risen to 0.67. What is the new beta of the British market from a U.S. perspective?

    Acceptance of Project

    The ABC Co. has no debt in its capital structure, a beta of 0.8, and raises all funds through sale of common stock. The current market rate for similar stock is 14% and the risk-free rate is 6%. The firm is considering a project with a return of 12.9%. Should it accept the project, and if so why (Show all work).

    Standard Deviation of Portfolio & Beta of Stocks

    Problem #3: Stock X has a standard deviation of returns of 0.6, and Stock Y has a standard deviation of 0.4. The correlation of the two stocks is 0.5. Compute the standard deviation of a portfolio invested half in X and half in Y. Problem #4: The expected standard deviation of market returns is 0.20.Maria Houseman has the fol

    What is the alpha of the stock?

    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 expected market rate of return is 15 percent

    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?

    How to Calculate Expected Return on a Portfolio

    Work and explain in excel Suppose you invested 35,000 in the following four stocks invested Beta A 14,000 0.6 B 15,000 1.1 C 16,000 1.3 D 17,000 1.8 Risk free rate is 5 percent and expected return on the market portfolio is 18 percent. Based on CAPM, what is the expected return on the above portfolio?

    Concept of Beta in a Web Page

    Using This Web Page, find the value of beta for your reference company. Write a two page paper discussing the following items: Reference Company: Haemonetics Corporation a. What does this beta means in terms of the overall risk of your company and the implications for raising capital for your firm? Are interest rates charged

    Depreciation tax-shield, portfolio beta,preference dividend

    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

    Calculating covariance, and beta

    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

    Given a required return of 15%, what should the stock sell for today

    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

    Required Rate of Return: Example Problem

    How should this be solved? What is the required rate of return for ABC, Inc if investors expect a 5% rate of inflation in the future? ABC has a beta of 2 and the company's realized rate of return has averaged 15% over the last 5 years. The real risk free rate is 3% and the market risk premium is 5%.

    Rate of Return

    52. Calculate the required rate of return assuming that investors expect a 5 % rate of inflation in the future. The real risk free rate is = to 3% and the market risk premium is 5 %. The company has a beta of 2.0 and its realized rate of return has averaged 15 % over the last 5 years 15 16 17 18 20

    Dividend

    47. The co.'s last dividend Do, was .50 and the company expects to experience no growth for the next 2 years. The co. will grow at an annual rate of 5% in the third and fourth years, and, beginning with the fifth year, it should attain a 10% growth rate which it will sustain thereafter. The co. has a required rate of return of

    Expected rate of return on a stock exceeds the required rate

    42. If the expected rate of return on a stock exceeds the required rate 1. The stock is experiencing supernormal growth 2. The stock shoudl be sold 3. The company is probably not trying to maximize price per share 4. The stock is a good buy 5. Dividends are not being declared (Pick the best answer)

    Portfolio required return

    A money manager is holding the following portfolio: Stock Amount Invested Beta 1 $300,000 0.6 2 300,000 1.0 3 500,000 1.4 4 500,000 1.8 The risk-free rate is 6 percent and the portfolio's required rate of return is 12.5 percent. The manager would like to sell all of her holdings of Stock 1 and use

    Expected and Required Returns / Beta

    Risk free rate of 7% and market risk premium of 2 %. The best investment of these: Expected Return of 9.01 / Beta 1.70 Expected Return of 7.06 / Beta 0.00 Expected Return of 5.04 / Beta -0.67 Expected Return of 8.74 / Beta 0.87 Expected Return of 11.50 / Beta 2.50 The 7.06 with Beta of 0.00 is best, but how do I calculat

    calculate return on equity and return on equity ratio

    The Thomas Lane Company has a return-on-assets (investment) ratio of 12 percent. a. If the debt-to-total-assets ratio is 40 percent, what is the return on equity? b. If the firm had no debt, what would the return-on-equity ratio be?

    Rate of return

    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

    Stock Problems

    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

    Required rate of return on stocks and equilibrium price

    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

    Foreign Investments - Beta Question

    Please work problems; formula and showing how to solve problem is most important (so I can see how to solve similar problems). Thanks Suppose that the standard deviations of the British and U.S. stock markets have risen to 38 percent and 22 percent, respectively, and the correlation between the U.S. and British markets has