Market risk premium given an expected return on security

Assignment Help Financial Management
Reference no: EM131182767

1. According to the CAPM, what is the market risk premium given an expected return on a security of 20.0%, a stock beta of 1.8, and a risk-free interest rate of 11%?

a. 5.00%     b. 19.80%     c. 11.00%     d. 9.90%

2. A common stock pays an annual dividend per share of $2.20. The risk-free rate is 7% and the risk premium for this stock is 3%. If the annual dividend is expected to remain at $2.20, what is the value of the stock?

Stock value $

Reference no: EM131182767

Questions Cloud

Determining the structure of society : Sociologists point to ways in which family life reflects not just individual choices but the structure of society as well. Provide three examples of how society shapes family life.
Define the basic concepts used in the discipline of sociolog : Define the basic concepts used in the discipline of sociology. Define the various methodologies for sociological research. Identify the sociological perspective to the inequalities of class, race, gender, ethnicity, sexual orientation, socioeconomic..
Evaluate management decision on its use of vendors : Evaluate management's decision on its use of vendors and spokespersons. Indicate the organizational impact of these decisions. As a manager within the selected company, suggest one (1) innovative idea that could have a positive impact on both the em..
Explain how training effectiveness is measured : Identify the kinds of training the organization provides for employees. Include company-wide training, such as orientation and harassment, as well as training that is unique to this organization, such as forklift training and ERP system training.
Market risk premium given an expected return on security : According to the CAPM, what is the market risk premium given an expected return on a security of 20.0%, a stock beta of 1.8, and a risk-free interest rate of 11%? A common stock pays an annual dividend per share of $2.20. The risk-free rate is 7% and..
Appropriate research topic : The first written assignment requires you to select an appropriate research topic for this course and to submit an outline of how you wish to analyze the topic. Select a topic that is interesting to you that is also related to the course topics an..
Social security may not be available when you retire : Social Security may not be available when you retire? We all pay into the system so should there be money available for you to use? Is retirement a right?
Determine two possible corporate governance challenges : Corporate governance has become a hot issue in the U.S. over the past two decades. From your analysis of the case study, determine two possible corporate governance challenges that might be faced by Best Buy as a result of its rapid growth
Write a critique of steve jobs 2005 stanford university : Write a written critique of Steve Job's 2005 Stanford University Commencement Speech.- Create a Word Doc for your answers to each question.

Reviews

Write a Review

 

Financial Management Questions & Answers

  Considering two potential projects for the funds

Singing Fish Fine Foods has $2,000,000 for capital investments this year and is considering two potential projects for the funds. Project one is updating the deli section of the store for additional food service. If the appropriate discount rate for ..

  Occur to the stock price on-after the ex-dividend date

Which of the following is most likely to occur to the stock price on/after the ex-dividend date?

  What is the current ratio and what is the quick ratio

SDJ, Inc., has net working capital of $3,490, current liabilities of $4,950, and inventory of $4,990. What is the current ratio? What is the quick ratio?

  According to the unbiased expectations theory

The current one-year T-bill rate is .30 percent and the expected one-year rate 12 months from now is 1.00 percent. According to the unbiased expectations theory, what should be the current rate for a two-year Treasury security?

  What is after-tax cost of debt

Bedrick Co. Can borrow at an interest rate of 7.3% for a period of eight years. Its marginal federal-plus state tax rate is 40%. What is Bedrick's after-tax cost of debt? The company faces a tax rate of 40%. If the company wants to issue new debt, wh..

  What price do you forecast for the stock one year from now

Horse and Buggy Inc. is in a declining industry. Sales, earnings, and dividends are all shrinking at a rate of 15% per year. What price do you forecast for the stock one year from now? What is the cost of capital on the stock?

  For a company whose target capital structure calls

For a company whose target capital structure calls for 50% debt and 50% common equity, which of the following statements is CORRECT?  The cost of retained earnings typically exceeds the cost of new common stock.

  According to the international fisher effect

Nominal annual interest rates in Germany are 5%. The spot rate for the Euro is $1.21 and the Euro is expected to adjust to a future spot rate (one year from today) of $1.25. According to the international Fisher effect (IFE), what is the nominal inte..

  Compounding frequency and time value

Compounding frequency and time value: You plan to invest $2,000 in an individual retirement arrangement (IRA) today at a nominal annual rate of 8%, which is expected to apply to all future years.

  Retirement fund-what is the monthly payment

If you want to have $1,250,000 at retirement in 32 years, how much will you have to save every two weeks at 10.5% to achieve the goal? If you have $1,000,000 at retirement, how much can you withdraw every month over the 25 years of your retirement if..

  What is the yield that trevor would earn by selling the bond

Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for $975.28. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,093.03, what is the yield that Trevor would earn by sell..

  What is the current share price

Bui Corp. pays a constant $13.30 dividend on its stock. The company will maintain this dividend for the next seven years and will then cease paying dividends forever. If the required return on this stock is 10 percent, what is the current share price..

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