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1. According to the CAPM, what is the market risk premium given an expected return on a security of 20.0%, a stock beta of 1.8, and a risk-free interest rate of 11%?
a. 5.00% b. 19.80% c. 11.00% d. 9.90%
2. A common stock pays an annual dividend per share of $2.20. The risk-free rate is 7% and the risk premium for this stock is 3%. If the annual dividend is expected to remain at $2.20, what is the value of the stock?
Stock value $
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To calculate the present value of a business, the firm's free cash flows should be discounted at the firm's:
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When Jamal graduated from college recently, his parents gave him $1,460 and told him to use it wisely. Jamal decided to use the money to start a retirement account. After doing some research about different options, he put the entire amount into a ta..
Calculate the expected return of portfolio A with a beta of 1.5. What is the alpha of portfolio A. (Negative value should be indicated by a minus sign.)
For the average business leader who is not in a finance role, how do risk, return, and the cost of capital impact him or her? How can you synthesize this into the workplace?
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