CAPM and required return

Assignment Help Financial Management
Reference no: EM13881275

CAPM and required return

Bradford Manufacturing Company has a beta of 1, while Farley Industries has a beta of 0.85. The required return on an index fund that holds the entire stock market is 9.5%. The risk-free rate of interest is 4.5%. By how much does Bradford's required return exceed Farley's required return? Round your answer to two decimal places.

Reference no: EM13881275

Questions Cloud

Approximate after-tax cost of debt for a new issue of bonds : The coupon rate on an issue of debt is 8%. The yield of maturity on this issue is 10%. The corporate tax rate is 31%. What would be the approximate after-tax cost of debt for a new issue of bonds?
Difference between service and manufacturing business : difference between service and manufacturing business
Face value bond quoted : A $1,000 face value bond quoted as 102.16 sells for _____ and a bond quoted as 99:08 sells for _____.
How could fraud be perpetrated through the sales : How could fraud be perpetrated through the sales returns process?
CAPM and required return : Bradford Manufacturing Company has a beta of 1, while Farley Industries has a beta of 0.85. The required return on an index fund that holds the entire stock market is 9.5%. The risk-free rate of interest is 4.5%. By how much does Bradford's required ..
Discuss the importance of constructing confidence intervals : Discuss the importance of constructing confidence intervals for the population mean
Considering change in its capital structure : Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 7%, and its stock price is $40 per share with 2 million shares outstanding. BEA is considering increas..
How can a security guard in a warehouse be considered : How can a security guard in a warehouse be considered an important component of a company accounting system?

Reviews

Write a Review

Financial Management Questions & Answers

  Differences in quantitative easing and open market operation

Describe Open Market Operations in detail (what it is, who uses it, how it is used, why it is used, why it is important, how it affects the economy, etc) Describe the differences between Quantitative Easing and Open Market Operations

  What is the present equivalent cost of the investment

A machine at a bottling plant that has a first cost of $150,000, operating and maintenance costs of $17,500 per year, and an estimated net salvage value of $25,000 at the end of thirty years. Assume an interest rate of 8%. What is the   present equiv..

  Game check in his checking account

Tank Johnson just deposited his $75,000 game check in his checking account. The account bears a 1.5% annually and Tank desires to save his money for the pending lockout for 2 years. How much will he have after 2 years?

  Received loan from local bank with nominal interest rate

Recently, Jamie and Jake each bought new cars. Both received a loan from a local bank with a nominal interest rate of 12% where payments are made at the end of each month, and they both pay the same monthly payment. Jamie's loan is for $15,000; howev..

  Constant growth valuation-estimated required rate of return

Woidtke Manufacturing's stock currently sells for $32 a share. The stock just paid a dividend of $2.75 a share (i.e., D0 = $2.75), and the dividend is expected to grow forever at a constant rate of 4% a year. What stock price is expected 1 year from ..

  Subsidiary x sells 10000 units to subsidiary y annually the

subsidiary x sells 10000 units to subsidiary y annually. the marginal income tax rate for subsidiary x is 30 and the

  A bond is common investment opportunity

A bond is a common investment opportunity. Suppose you have the opportunity to buy a bond with a par value of $1,000 and semi-annual coupon payments of $40 that matures in 10 years. Supposing this bond is available for $960, what is the payback perio..

  Treasury bond-what is the present value of the bond

A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 6.5% every six months. The semi annually compounded interest rate is 5.0%. What is the present value of the bond?

  Payments are annual and the loan will negatively amortize

Instruction as how you solve with a financial calculator is preferred. A business borrows $325,914 for 8 years at an annual rate of interest of 6.1%. If payments are annual and the loan will negatively amortize by $30,539, what will be the annual pay..

  Suppose that the installation of low-loss thermal windows

Suppose that the installation of low-loss thermal windows is expected to save 450 per year on bills. If you live in your home for 40 years and could earn 6% per year on other investments, how much could you afford to pay now to have the windows insta..

  Virginias gain or loss as result of these casualties

Virginia has a casualty gain of $5,000 and a casualty gain of $2,500, before reduction by the $100 floor. The gain and loss were the result of two separate casualties, and both properties were personal-use asset. What is Virginia's gain or loss as a ..

  Banks typically pay interest on an annual basis

Banks typically pay interest on an annual basis. Banks typically pay interest on a daily basis. Bond holders are usually paid on a semi-annual basis

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