One of two well-diversified portfolios

Assignment Help Finance Basics
Reference no: EM131077643

1. Nike, Inc. just paid a dividend of $0.65 a share. Dividends are expected to grow at a rate of 10% per year for the next two years and then at a rate of 2.5% thereafter. If your required rate of return is 8%, what is the most that you should be willing to pay for a share of Nike stock today? 

2. You wish to hold a two-asset portfolio whose risk you want to be only 3/4 as risky as the market. If your portfolio consists of a risky asset that has 110% of the average market risk and T-bills, what percent of your portfolio should be invested in the risky asset?

  • A.32%
  • B.44% 
  • C.56% 
  • D.68%

3. If the risk-free rate is 2% and the expected returnon the market is 10%, according to CAPM, a stock that is only half as risky as the market on average would have an expected return of _____?

4. You are considering investing in one of two well-diversified portfolios. Portfolio A has an expected return of 8% and a beta of 0.85 while Portfolio B has an expected return of 12% and a beta of 1.95. Assuming that you are a rational risk-averse investor and the risk-free rate is 3%, which of the two portfolios should you choose and why?

Reference no: EM131077643

Questions Cloud

Required rate of return : What stock price is expected 1 year from now? Round your answer to two decimal places. $ What is the required rate of return? Round your answers to two decimal places. %
What is the probability that she is female : hat is the probability that she is female?
Stock current value per share : The dividend is expected to grow at a constant rate of 4% a year. The required rate of return on the stock, rs, is 17%. What is the stock's current value per share?
What is the probability that the person actually has disease : what is the probability that the person actually has the disease?
One of two well-diversified portfolios : You are considering investing in one of two well-diversified portfolios. Portfolio A has an expected return of 8% and a beta of 0.85 while Portfolio B has an expected return of 12% and a beta of 1.95. Assuming that you are a rational risk-averse i..
What is the probability that the 3-yr-old is white hispanic : If a participant in the research is selected at random and is found to be obese, what is the probability that the 3-yr-old is white? Hispanic?
Health care financial reform proposal : Write a paper (1,500-2,000 words) on what you think should be included in a future reform of the health care system, focusing on financial operating changes that would improve efficiency and provide for improved transparency to the public. Include..
Analysis of elf corporation profit performance : Income statements are presented in the table below for the Elf Corporation for the years ending December 31, 2010, 2009, and 2008. Write a one-paragraph analysis of Elf Corporation's profit performance for the period.
What do we call the perspective of psychological science : What do we call the perspective of psychological science that deals with how much our genes, and our environment, influence our individual differences?

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Examples of marketing having delivered consumer

Provide a few examples that prompt these criticisms. Are there any good examples of marketing having delivered consumer and/or social value that you can name?

  How long will it take you to pay back the loan

You've borrowed $2,067.65 and agreed to pay back the loan with monthly payments of $130. If the interest rate is 9% stated as an APR.

  What assumptions are critical

What assumptions are critical

  Calculate value of beta

Alpha Corporation and Beta Corporation are identical in every way except their capital structures. Alpha Company, an all-equity firm, has 5,000 shares of stock outstanding, currently worth $20 per share.

  Target market is for alvin and the chipmuncks

In 2-3 pages, discuss who you think the target market is for Alvin and the Chipmuncks. Describe how they can find out what their target customers are looking for in merchandise related to the tour.

  Explore how to identify and develop high-potential talent

Explore how to identify and develop high-potential talent

  Determining the firms net working capital

If the current liabilities of $20,000 aqccounts payable and $10,000 in short term debt (notes payable), what in the firms net working capital?

  Define the effects of competition on residual income

Define the effects of competition on residual income and the residual income valuation approach.

  What is the market value

Klingon's current balance sheet shows net fixed assets of $3.5 million, current liabilities of $2 million, and net working capital of $570,000. If all the current assets were liquidated today, the company would receive $1.05 million cash.

  Compare and contrast the main policies of the us federal

Compare and contrast the main policies of the US Federal Reserve and the European Central Bank over the last 10 years. Based on these policies, identify and contrast the main priorities of these institutions. How do these policies affect exchange rat..

  What contemporary factors contribute to internationalization

What contemporary factors are contributing to the internationalization of the subject of Finance and What contemporary factors are contributing to the internationalization of the subject of Finance?

  What is the future value of the annuity (ordinary)

You have $50,000 in your bank account. You plan to save $5,000 at the end of each year for the next 10 years. The interest rate is 8% per annum, compounded monthly. What is the future value of the annuity (ordinary)?

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