Solve it please, Corporate Finance

Question 1

If the economy booms, RTF, Inc. stock is expected to return 10%. If the economy goes into a recessionary period, then RTF is expected to only return 4%. The probability of a boom is 60% while the probability of a recession is 40%. What is the variance of the returns on RTF, Inc. stock?

Question 2

 The stock of Big Joe''s has a beta of 1.14 and an expected return of 11.6%. The risk-free rate of return is 4%. What is the expected return on the market? 


Question 3 The Inferior Goods Co. stock is expected to earn 14% in a recession, 6% in a normal economy, and lose 4% in a booming economy. The probability of a boom is 20% while the probability of a normal economy is 55% and the chance of a recession is 25%. What is the expected rate of return on this stock? 
Posted Date: 3/11/2013 5:55:24 AM | Location : United Arab Emirates







Related Discussions:- Solve it please, Assignment Help, Ask Question on Solve it please, Get Answer, Expert's Help, Solve it please Discussions

Write discussion on Solve it please
Your posts are moderated
Related Questions

Problem: Banks are net lenders, when they have excess funds, or net borrowers, when they have future deficits. As any lender or borrower, they cannot eliminate interest rate r

Syfy is considering investing in a project with the following details. The initial cost of investing in equipment is estimated to be Rs1,200,000. However, the project is deemed to


Baobab rolling mills owns a lathe machine which was purchased 10years ago at sh. 75 million. The machine had an expected life of 15 yrs at the time it was purchased, and management

What the implications of the pecking order theory?

why debt and preferred stock do not meet each other while in determining indifference point...


Hydra Multinational is a vast conglomerate firm involved in a wide array of business ventures ranging from satellite radio to cat food.  One of its many divisions, a restaurant cha

Question : (a) "Risk of diversified portfolio is much lower than the risk of less-diversified portfolio" - What is the relevance of this statement to corporate finance manager