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A regression is run for each of 3 stocks in which the Y variable is the monthly return on the stock and the X variable is the monthly return on a market index. The data are coded in decimal form, meaning that a 5% return would be 0.05 in the data. It can be assumed during this period that the monthly risk-free rate was 0%. The regression results look like this:
Stock 1
Y = 0.0139 + 1.52X R-square = 0.15
Stock 2
Y = -0.0054 + 1.19x R-square = 0.47
Stock 3
Y = 0.002 + 1.60x R-square = 0.23
Which stock earned the highest return during the historical period over which you estimated these regressions?
Assuming the Capital Asset Pricing Model (CAPM) is true, which stock has the highest expected return in the future?
One of these firms is a diversified conglomerate, and the other two operated only in one or two lines of business. Which is the conglomerate and why?
How much was the firm's earnings before taxes (EBT)?
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The? firm's required return on? equal-risk investments is 24.9?%. Evaluate the proposed? relaxation and make recommendation to the firm.
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You are a financial analyst for the Ajax Company, which uses about $1 million of inventory per month. The purchasing manager has come to you for help with a buying decision. He can get a big discount on $15 million of inventory by buying it all at on..
Which of the following would indicate an improvement in a company’s financial position, holding other things constant?
many americans feel that their jobs at home should be protected and that free trade should be limited. however global
Which of the following statements regarding stock trading is INCORRECT?
Firms should adjust for execution risk by
Find the 3-year implied forward rate one year and two years from now (the expected 3-year spot rate starting one year from now and two years from now). State the final answers as an annual rate.
Suppose a company will issue new 25-year debt with a par value of $1,000 and a coupon rate of 8%, paid annually. The tax rate is 40%. If the flotation cost is 3% of the issue proceeds, then what is the after-tax cost of debt? Disregard the tax shield..
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