Explanation to expected return

Assignment Help Basic Statistics
Reference no: EM1390667

Wolfrum Technology (WT) has no debt. Its assets will be worth $450 million in one year if the economy is strong, but only $200 million in one year if the economy is weak. Both events are equally likely. The market value today of its assets is $250 million.

a. What is the expected return of WT stock without leverage?

b. Assume the risk-free interest is 5%. If WT borrows $100 million today at this rate and uses the proceeds to pay an immediate cash dividend, what will be the market value of its equity just after the dividend is paid, according to MM?

c. What is the expected return of MM Stock after the dividend is paid in part (b)?

Reference no: EM1390667

Description of z test for proportion

The producer of a TV special expected about 40 percent of the viewing audience to watch a rerun of a 1965 Beatles Concert. A sample of 200 homes revealed 60 to be watching t

Basic bio-statistics

Basic Biostatistics is a concise, introductory text that covers biostatistical principles and focuses on the common types of data encountered in public health and biomedical

Business travelers-internal company visit

What is the probability that between 133 and 171 of the business travelers say that the reason for their most recent business trip was an internal company visit?

Do you think charlie is correct in given context

According to Charlie, there's only a 0.36 (i.e., 0.6 × 0.6) probability that both of these people will say Wendy's hamburgers taste good. Do you think Charlie is correct? Ex

How should randomization be used in experiment

Explain how a matched pairs experiment should be conducted to compare texting and typing speeds. Be sure to explain the role of randomization, and why it is important in thi

Exports to various european countries

Exposure to Exchange Rates McCanna Corp., a U.S. firm, has a French subsidiary that produces wine and exports to various European countries. All of the countries where it s

What is probability that one miner will fall in lowest class

If two miners are selected at random from the "infinite population" of min- ers with the distribution for the miners in the table, what is the probability that one miner wil

Important events in western history

Timeline, in chronological order, indicate what you would identify as the ten most important events in western history before 1600 CE. Briefly explain your selection of eac


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd