Tammy, Corporate Finance

rf is 5%
rM is 10%
according to the SML and the CAPM, an asset with a beta of -2 has a required return of negative 5% (=5-2(10-5).
can this be possible?
Is this a negative asset with risk
Why would someone invest in this negative investment?
Posted Date: 2/15/2013 3:14:54 AM | Location : United States

Related Discussions:- Tammy, Assignment Help, Ask Question on Tammy, Get Answer, Expert's Help, Tammy Discussions

Write discussion on Tammy
Your posts are moderated
Related Questions
Determine pay back period and net present value? A company is considering two projects with the subsequent cash flow streams:   Year           Project A

Question: "Banks have plenty of motives for developing risk-based practices and the risk models. In addition, regulators made this development a major priority for the banking

Question: i) The treasurer of a corporation is trying to choose between options and forwards contracts to hedge the corporation's foreign exchange risk. Discuss the relative

You are the Executive Director for the brand new Burkina Faso field office of a U.S.- based not-for-profit organization called Paper for All that distributes academic resources fo

Explain what caused "the long boom" in the U.S. and world economy from the early 1980s to its peak in 2006.  Make sure to mention, with a few key facts in each case, the role playe

Book Value of Equity: This is the measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid

If the cost of debt is the lowest choice among financing options, would increasing our percentage of debt reduce our cost of capital?#

What are the advantages and disadvantages of the alternative dividend policies of the three companies? Discuss the circumstances under which each managing director might be correct

differentiate between aloocative effiency and pricing effiency

The total sales are not necessarily equal to total demand, since some demand may have been lost. For the case that lost demand is not recorded at all, Fisher et al. (2000) propose