What is the probalibity that it is overvalued

Assignment Help Finance Basics
Reference no: EM13255562

International Many Foods, Inc's common stock has a beta of 0.9. The stock does not currently pay a dividend, but is expected to appreciate in value from a current price of $15 to $25 in the next 5 years. The risk-free rate is 6 percent and the market risk premium is 7.4 percent. If the standard deviation of the expected return from this stock is 2 percent, what is the probalibity that it is overvalued?

Reference no: EM13255562

Questions Cloud

With what speed does the boy recoil : A 61.2-kg boy at rest on roller skates throws a 0.915-kg ball horizontally with a speed of 7.44 m/s. With what speed does the boy recoil
How much income can you generate in a cash account : You manage a $10 million endowment fund and would like to write index calls to generate some income. Suppose the OCT 320 OEX call sells for $1.13, and the current level of the index is 315.66. How much income can you generate in a cash account?
What is the index of refraction of the gas : One leg of a Michelson interferometer contains an evacuated cylinder of length L, having glass plates on each end, what is the index of refraction of the gas
Evaluate business conduct in the clothing : Evaluate business conduct in the clothing, textile and footwear industries using three ethical principles of the Global Business Standards Codex.
What is the probalibity that it is overvalued : If the standard deviation of the expected return from this stock is 2 percent, what is the probalibity that it is overvalued?
How would this change the average amount of time : This will increase the average wait time to 3.4 minutes for the remaining 4 lines. How would this change the average amount of time? Please show work for both answers.
Find the two values of zl if zc is given : A VSWR is measured along a transmission line to be 2. Find two values for the reflection coefficient ? Which of these values will correspond to ZL Zc
Determine what is the supple frequency : A squirrel-cage motor winding is wound up for two poles. At full-load, the motor operates at 3294 rpm with a slip speed of 306 rpm. What is the supple frequency
Potential to catalytically destroy ozone in the stratospher : Assuming that equal numbers of moles of each were released into the air at ground level, rank these four compounds in terms of their potential to catalytically destroy ozone in the stratosphere. Explain

Reviews

Write a Review

 

Finance Basics Questions & Answers

  Determine the new value

Friedman Steel Corporation will pay a dividend of $1.50 per share in the next 12 months. The required rate of return is 10% and the constant growth rate is 5%.

  Calculation of monthly payment

If Bank One is provide a 30 year mortgage with and EAR of 5 3/8 percent. If you plan to borrow $150,000, Determine your monthly payment?

  Compute component cost of debt

Rollins Company has a target capital structure consisting of 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Suppose the firm has insufficient retained earnings to fund the equity portion of its capital budget.

  Mortgage-annuity and rate of return

A $20,000 mortgage is to be paid through 180 equal monthly payments, each comprising some principal along with interest on outstanding principal, at an effective rate of 3 1/2 per half year. What are the monthly payments?

  Payback period-net present value-annual rate of return

Newman Medical Center is considering purchasing an ultrasound machine for $1,150,000. The machine has a 10-year life and an estimated salvage value of $30,000.

  Calculate the estimated rates of return

You expect the risk-free rate to be 3% and the market return to be 8 percent. You also have the following data about three stocks.

  Calculate the price of bond if ytm is given

Valuing Bonds: Syberboard has issued a bond with the following characteristics:

  Merger of sprint and t-mobile

Do you think a merger between Sprint and T-Mobile would add value to the shareholders of both corporations? Consider the following issues:

  Compute total variable costs

Nelson Corporation manufactures running shoes. The selling price per pair of shoes averages $80 and variable costs each pair are $47.50.

  Which quarterback is better paid

Famous quarterback just signed the $17 million contract providing $4.25 million a year for 4 years. Who is better paid? The interest rate is 8 percent.

  Determine the effective quarterly rate

Determine the effective quarterly rate and the nominal annual rate, What is the spreadsheet function to find the nominal annual rate above

  Estimate the weighted cost of capital

Electronics Unlimited has the following capital structure: 60 percent stock, 10 % preferred stock, and 30% in debt. The after-tax cost of debt is 8 percent, the cost of preferred stock is 10 percent, and the cost of common stock is 12 percent.

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