Expected return on an average investment in the market

Assignment Help Financial Management
Reference no: EM13911283

You are considering the purchase of a common stock whose historical beta is .5. What rate of return should you require from this stock if the current risk free rate of return is 4% and the expected return on an average investment in the market is 11%?

Reference no: EM13911283

Questions Cloud

Using the dividend-growth model : Two stocks each pay a $1 dividend that is growing annually at 8 percent. Stock A's beta = 1.3; stock B's beta = 0.8. If Treasury bills yield 9 percent and you expect the market to rise by 13 percent, what is your risk-adjusted required return for eac..
Expected constant dividend and the last dividend paid : Ajax common stock has a 6% expected constant dividend and the last dividend paid was $2 per share. If you require a 12% return on stock of this risk level what is the maximum price you should pay?
What is ibm smarter planet business strategy : 1. What is IBM's Smarter Planet business strategy? How does this strategy relate to IBM's mission and values?
What is the projected net income : A proposed new investment has projected sales of $837,000. Variable costs are 57 percent of sales, and fixed costs are $187,610; depreciation is $97,000. Assume a tax rate of 35 percent. What is the projected net income?
Expected return on an average investment in the market : You are considering the purchase of a common stock whose historical beta is .5. What rate of return should you require from this stock if the current risk free rate of return is 4% and the expected return on an average investment in the market is 11%..
Use straight-line depreciation to zero over projects life : You are evaluating two different silicon wafer milling machines. The Techron I costs $249,000, has a three-year life, and has pretax operating costs of $66,000 per year. use straight-line depreciation to zero over the project’s life and assume a salv..
What functional areas of altitude online are supported : What functional areas of Altitude Online are supported by MIS? How do MISs and DSSs provide a value add to Altitude Online products?
How to solve the most frustrating aspect of college : Have your team make a group decision about how to solve the most frustrating aspect of college or university life. Appoint one or two members of the team to disrupt the meeting with negative group behavior. After the meeting.
Conveyor systems for transporting raw materials : Make a cost comparison between two conveyor systems for transporting raw materials. The service life of each system is 5 years and the write-off period is 5 years. Use straight-line depreciation and assume no salvage value for either system. At what ..

Reviews

Write a Review

Financial Management Questions & Answers

  Appropriate expected rates of return for three securities

The expected return for the general market is 13.0 percent 9.2, and the risk in the market is 9.2 percent. Tasaco, LBM, and Exxos have betas of 0.838, 0.652 and 0.572 respectively. What are the appropriate expected rates of return for the three secur..

  Describe what a po and io would look like

Consider a $ 100 million pool of conventional mortgages paying 8 percent interest. Suppose that you create one PO and one IO for this entire pool. Describe what a PO and IO would look like for this mortgage pool.

  Rise for the option strategy to be more profitable

The current price of a stock is $94, and three-month European call options with a strike price of $95 currently sell for $4.70. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 2..

  Assume the market price of a 5-year bond for margaret inc

assume the market price of a 5-year bond for margaret inc. is 900 and it has a par value of 1000. the bond has an

  What would be your annualized rate of return

Suppose you invest $ 4,030 today to start a business. In 6 years you hope to sell this company for $ 14,849. What would be your annualized rate of return? Express your answer as a percentage, rounded to the first decimal, and without the ‘%’ sign. So..

  What is the estimated raw materials inventory balance

Morganton Company makes one product and it provided the following information to help prepare the master budget for its first four months of operations: The budgeted selling price per unit is $65. Budgeted unit sales for June, July, August, and Septe..

  Find an article about a company reporting key financial news

Search current news (less than 6 months old) and find an article about a company reporting key financial news (e.g. landing a large contract, reporting unusual profits or losses, expressing concern for future profitability, etc.). Briefly review the ..

  A reverse annuity mortgage is made with balance

A reverse annuity mortgage is made with a balance not to exceed $300,000 on a property now valued at $700,000. The loan calls for monthly payments to be made to the borrower for 120 months at an interest rate of 11% MEY. What will the monthly payment..

  Factors on the fama-french multifactor model

For a large company stock mutual fund, would you expect the betas to be positive or negative for each of the factors on the Fama-French multifactor model? Also, if the market is efficient what value would you expect for alpha? Do your estimates suppo..

  More data used in forecasting-more accurate forecast

"The more data used in forecasting, the more accurate the forecast will be." Do you agree with this statement? If not, provide an example of when this might not be true.

  What was the cash flow to investors from operating activity

Sunset Corporation reported EBITDA of $7,300,125 and net income of $3,328,950 for the fiscal year ended December 31, 2014. During the same period, the company had $1,155,378 in interest expense, $1,023,285 in depreciation and amortization expense and..

  What amount will the investment accumulate

To what amount will the following investment accumulate? $18,117 invested today for 23 years at 3.48 percent, compounded monthly.

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