Basic equation for the capital asset pricing model

Assignment Help Financial Management
Reference no: EM131523795

Use the basic equation for the capital asset pricing model ?(CAPM?) to work each of the following problems.

a. Find the required return for an asset with a beta of 0.74 when the? risk-free rate and market return are 9?% and 13%?, respectively.

b. Find the ?risk-free rate for a firm with a required return of 16.054?% and a beta of 1.74 when the market return is 11%.

c. Find the market return for an asset with a required return of 22.640?% and a beta of 1.72 when the? risk-free rate is 9%.

d. Find the beta for an asset with a required return of 17.408?% when the? risk-free rate and market return are 8?% and 12.8%?, respectively.

Reference no: EM131523795

Questions Cloud

Discuss the properties of the tornado diagram : A friend of yours can invest in a multiyear project. The cost is $14,000. Annual cash flows are estimated to be $5,000 per year for six years but could vary.
What advice does he offer to parents regarding fairness : Describe how language, culture, family background, and communities influence the learning of individuals with the selected disability.
Calculate market risk premium : Assume that the? risk-free rate, Rf, is currently 6?% and that the market? return,rm?, is currently 11?%. Calculate the market risk premium.
Create a two-way sensitivity graph : Reconsider Hugh Liedtke's decision as diagrammed in Figure 4.2. Note that three strategies are possible: accept $2 billion.
Basic equation for the capital asset pricing model : Use the basic equation for the capital asset pricing model ?(CAPM?) to work each of the following problems.
Describe a policy change for which you could advocate : Describe a policy change for which you could advocate. Be sure the policy change would bring about a health-related behavioral and/or a cultural change
Prepare an alternative solution based on your own research : Prepare an alternative solution based on your own research using three to five academic sources from journals, professional organizations, and websites.
Controversial ethical and legal implications : Choose a health care issue with controversial ethical and legal implications that was at the center of a high visibility case in the public domain.
Calculate the net values at the ends of the branches : When you purchase a car, you may consider buying a brand-new car or a used one. A fundamental trade-off in this case is whether you pay repair bills.

Reviews

Write a Review

Financial Management Questions & Answers

  About the economic order quantity model

Appliance for Less is a local appliance store. It costs this store $23.93 per unit annually for storage, insurance, etc., to hold microwave in their inventory. Sales this year are anticipated to be 613 units. Each order costs $91. The company is usin..

  Payoffs have been equalized and riskless hedged investments

Madeline Manufacturing Inc.’s current stock price is $45 per share. Call options for this stock exist that permit the holder to purchase one share at an exercise price of $35. These options will expire at the end of 1 year, at which time Madeline’s s..

  What stock prices will you break even on the straddle

You establish a straddle on Walmart using September call and put options with a strike price of $51. The call premium is $4.30 and the put premium is $5.05. What is the most you can lose on this position? what stock prices will you break even on the ..

  Corporation with very high growth prospects

A corporation with very high growth prospects and many positive NPV projects to fund may want to increase its dividend based on the: a. very low agency costs of the corporation b. information effect c. tax bias against capital gains d. residual divid..

  Companys depreciation and amortization expense

Trevi Corporation recently reported an EBITDA of $32,000 and $9,500 of net income. The company has $6,700 interest expense, and the corporate tax rate is 35 percent. What was the company’s depreciation and amortization expense?

  What is the taxable gain on the disposal of the equipment

An oil refinery has decided to purchase some new drilling equipment for $140,000. The equipment will be kept for 10 years before being sold. The estimated MV at the end of 10 years is $11,000. If MACRS depreciation is used, under GDS guidelines, what..

  Traditionally pays an annual dividend

Capello's Deli traditionally pays an annual dividend of $1.67 per share. The firm is projecting dividends of $1.83 and $2.14 over the next two years, respectively. After that, the company expects to pay a constant dividend of $2.53 a share. What is t..

  Constant-growth dividend discount model

A firm pays a current dividend of $2, which is expected to grow at a rate of 8% indefinitely. If the current value of the firm’s shares is $54, what is the required return applicable to the investment based on the constant-growth dividend discount mo..

  Long-run economic growth in pursuing short-run stabilization

If monetary policy is used to control GDP, there is greater sacrifice of long-run economic growth in pursuing short-run stabilization the ________ is fiscal policy and thus the ________ is the real interest rate.

  Incorporateds stock prices and dividends

The Goodman Industries’ and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown below. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are ..

  What is queuing theory

What is queuing theory? Describe the different types of costs involved in a queuing system. In what areas of management can queuing theory be applied successfully

  Unaffected by firm choice of debt and equity financing

Match each of the following definitions to the appropriate terms: Terms (1- independence theory with corporate taxes,2- independence theory- no taxes, 3- saucer-shaped cost of capital curve), Definitions (A- The Cost of capital is unaffected by the f..

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