Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
You observe that IBM, Google, and Facebook’s stock returns have the betas in the table provided below. Suppose the expected market return is 8% and the risk-free rate is 3%.
Stock Beta:
IBM 1.5
GOOGLE 0.9
FB 0.5
a. Suppose the CAPM holds, what is the expected excess return for each stock?
b. You decide to take a long position in IBM and a short position in Google. According to the CAPM, what is the expected return from this investment strategy?
c. You regressed your portfolio that takes a long position in IBM and a short position in Google, on excess market returns. The equation you estimated is below. ( ) According to the CAPM what is the expected value of each parameter and why?
a+B(Rm-Rf)+e
(i.e. E(a) = ?, E(B) = ?, E(e)=?)
Suppose you put $100 into a savings account today, the account pays a nominal annual rate of 6%, but compounded semiannually, and you withdraw $100 after 6 months. What would your ending balance be 20 years after the initial $100 deposit was made?
When weighted average cost of capital (WACC) is used to value a levered firm, the interest tax shield is:
You invested $2,000 in the stock market one year ago. Today, the investment is valued at $1,720. What return did you earn? What return would you need to get next year to break even overall?
Is your rate of return positive or negative? - How would your overall rate of return have been different if you first earned -30% and then +30%?
Calculate the profit margin (net income/net sales) and asset turnover (net sales/total assets) to compute the return on assets (ROA). Now introduce the equity multiplier (total assets/total equity) to find the return on equity (ROE).
The noncallable bonds mature in 20 years, they have a 8% annual coupon rate and a par value of $1,000 and a market price of $1,050.00. The tax rate is 40% and the risk free rate is 4.50%, the market risk premium is 5.50%, and the stock's beta is 1.20..
Tooth Tortures is considering building a new office after the first was destroyed by a storm. They estimate the initial cost of construction of the new office, and equipment to total $1,000,000. What is the payback period? Dr. Payne states that since..
Last year, Cayman Corporation had sales of $30,000,000, total variable costs of $13,500,000, and total fixed costs of $5,000,000. In addition, they paid $3,000,000 in interest to bondholders. Cayman has a marginal tax rate of 35 percent. If Cayman's ..
An insurance company offers you an annuity of $36,000 per year for the next 15 years. They claim your return on the annuity is 13%. What should you be willing to pay today for the annuity?
Boomer Products, Inc. manufactures “no-inhale” cigarettes. As their target customers age and pass on, sales of the product are expected to decline. Thus, demographics suggest that earnings and dividends will decline at a rate of 5% (-5%) annually for..
What problems does Danny Stein face either e Music? What possible solutions exist to the problems identified in question one. What would be some recommendations to solve the problems?
On average, smaller stocks have lower returns than larger stocks? On average, Treasury bills have higher returns than stocks. Portfolios of smaller stocks are typically lss volatile than individual small stock
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd