Expected rate of return on portfolio

Assignment Help Business Management
Reference no: EM131337662

Given the beta of your company (0.62), the present yield to maturity on U.S. government bonds maturing in one year (currently about 4.5% annually) and an assessment that the market risk premium (that is - the difference between the expected rate of return on the 'market portfolio' and the risk-free rate of interest) is 6.5%, use the CAPM equation in order to find out what is the present 'cost of equity' of your company? Explain what is the meaning of the 'cost of equity'. Now choose two other companies, look up their "Beta" and report the names of these companies and their betas. Suppose you invest one third of your money in each of the stocks of these companies. What will the beta of the portfolio be? Given the data above, what will the Expected Rate of Return on this portfolio be? Do you feel that the three-stock portfolio is sufficiently diversified or does it still have risk that can be diversified away? Explain.

Reference no: EM131337662

Questions Cloud

Compare google with facebook : Compare Google with Facebook. In terms of the five forces of competition, do you feel these companies view one another as competitors? Why or why not?
How many children are vaccinated each year : What are the main reasons why you should vaccinate you child?- How many children are vaccinated each year?- How many diseases are the vaccination helping to cut down on?
Customer expectations by convenience and timing : Explain how you would exceed customer expectations by convenience and timing. In your answer, focus on a particular industry and create a scenario that illustrates your point. What is the impact on the customer, the store/location, the brand, and ..
Study the nine team roles and choose three to write more on : Teams have different needs, and people in organizations should be selected for a team to ensure diversity and expertise to fill various roles.Study the nine team roles and choose three to write more on.
Expected rate of return on portfolio : Given the data above, what will the Expected Rate of Return on this portfolio be? Do you feel that the three-stock portfolio is sufficiently diversified or does it still have risk that can be diversified away? Explain.
What are the strengths and limitations of this study : In your opinion, what are the strengths and limitations of this study? Does this study make a significant contribution to the literature and advance the knowledge base? Why or why not
Death-loss of capability with elder age : How can Martha Stewart be kept as an important part of MSLO yet also be reigned in, so that the firm views itself as accountable to many (rather than largely to Martha)? Do you think that can actually happen before her death/loss of capability wi..
Discuss about the case given below : Animal lovers in a suburb of Lost Angeles picketed a parochial school to protest the action of a priest-educator. The priest had drowned ten cats because they were too noisy and messy. He explained that his action had been "humane" and added, "I..
Ceo role of a public company : What seems to be Stewart's philosophy regarding the role of the CEO at MSLO? How has her philosophy affected the company? Is her philosophy an appropriate basis for the CEO role of a public company?

Reviews

Write a Review

Business Management Questions & Answers

  Cuba and t mobile

We are bring cellular service to Cuba after Castro dies. Prepare a 600 word response in which you explain how you would address

  How do employers measure knowledge skills and abilities

How Do Employers Measure Knowledge, Skills, and Abilities (KSAs)? Can you change organtizational culture? Does Organizational Behavior Modification (OB Mod) really work?

  Analyze in what ways does the person inspire leadership

In what ways does the person inspire leadership while building his or her own character and integrity? How does this leader exemplify the moral obligation to lead through kindness, compassion, and justice?

  Corporate ethics hr management

Corporate ethics have been the focus of increased attention in recent years. Many companies have looked to their HR team to develop the comprehensive ethics policy.

  Before applying the strategic models below

For this assignment, review the organization and the industry before applying the strategic models below to Ford Motor Company. You will need at least five current, scholarly or professional resources to complete this assignment. Follow these step..

  How would you measure the different forms of credit

What types of credit does the company extend to individuals and businesses and how are these managed? How would you measure the different forms of credit?

  Understand the organizational problem causes

What is the alternative name of cause and effect diagram ? how can it be used to understand the organizational problem causes?

  Organizational behavior and implications for business

Prepare a paper on a specific aspect of or topic relating to Organizational Behavior and its implications for business. Apply your findings to a specific industry or type of business.

  Analyze the fast food industry and what major competitors

BUMKT 5922 - Competitive Analysis. We have to select any one industry from the given options (we select food industry) then we analyze the fast food industry and what the major competitors as Mc Donald, KFC, Oporto, Hungry jacks, Subway. some of t..

  Implementing a best buy in taiwanin the government or

implementing a best buy in taiwanin the government or politics?benefits to locating in the countryliabilities to

  Development of a job evaluation committeeyou are tasked to

development of a job evaluation committeeyou are tasked to chair and develop a job evaluation committee. explain the

  Calculate the forecast using smoothing constants

Calculate the forecast using smoothing constants (a) equal to 0.30. - What can you say about the responsiveness of the two forecasts?

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