Calculate the required rate of return on pizza hots stock

Assignment Help Financial Management

Reference no: EM131338718

The stock of Pizza Hot, Inc., a Mexican pizza chain, has an estimated beta of 1.5. Calculate the required rate of return on Pizza Hot's stock if the SML is estimated as follows:

k_j= 0.06 +0.094β_j

based on

a. An initial inflation expectation of 4 percent.

b. A new inflation expectation of 6 percent.

Reference no: EM131338718

Questions Cloud

Calculate the equilibrium level of income : Calculate the equilibrium level of income or real GDP for this economy. What happens to equilibrium Y if G changes to 20? What does this outcome reveal about the size of the multiplier? What does this outcome reveal about the impact of fiscal poli..

New sausage system with installed cost : Dog Up! Franks is looking at a new sausage system with an installed cost of $515,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sausage system can be scrapped for $77,000.

Assess the immediate staffing needs at bnh : Blumberg's Nursing Home (BNH) is a 100-bed Medicare and Medicaid certified facility in suburban Philadelphia, PA. The administrator recently terminated the facility's Director of Nursing (DON), receptionist, and dietary aid for inappropriate condu..

Development of the european monetary system : Outline the development of the European Monetary System. Why did it develop?

Calculate the required rate of return on pizza hots stock : The stock of Pizza Hot, Inc., a Mexican pizza chain, has an estimated beta of 1.5. Calculate the required rate of return on Pizza Hot's stock if the SML is estimated as given.

Currency crisis-cause and resolution : A number of currency crises have affected certain countries, which have also resulted in contagion in the sense that the crises affected neighboring countries. In a critical essay, select a country (or countries) affected by a specific currency cr..

How high is the building : A flagpole 40 feet high stands on top of the Wentworth Building. From a point in front of Bailey's Drugstore, the angle of elevation for the top of the pole is 54° 54, and the angle of elevation for the bottom of the pole is 47° 30. How high is th..

Prepare a statement of retained earnings : Prepare a work sheet. (Adjusted trial balance columns may be omitted.) Prepare an income statement. Prepare a statement of retained earnings. Prepare a balance sheet. Prepare the closing entries.

Minimum of three general economic principles : Conduct an analysis of a recent article and provide your evaluation and outcome expectations in an articulate and informative paper that discusses:

User Account

All Pages