Portfolio of the two assets has an expected return

Assignment Help Financial Management
Reference no: EM131082753

A stock has a beta of 1.2 and an expected return of 10%. The risk free asset currently earns 4%. If a portfolio of the two assets has an expected return of 8%, what is its beta?

Reference no: EM131082753

Questions Cloud

Calculate the growth rate and P-E ratio : The market capitalization rate for Admiral Motors Company is 9%. Its expected ROE is 15% and its expected EPS is $7. If the firm’s plowback ratio is 40%. Calculate the growth rate and P/E ratio
Firm has current assets that could be sold for book value : A firm has current assets that could be sold for their book value of $32 million. The book value of its fixed assets is $70 million, but they could be sold for $100 million today. The firm has total debt with a book value of $50 million, but interest..
Corporate bond-expected yield to maturity : Five years ago, John purchased a 7% coupon (paid annually), 20-year maturity. $1000 fac value corporate bond for $900. He reinvested the coupons at 5% per year, and just sold off the bond at its prevailing yield to maturity of 10%. Will John have ear..
What is average accounts receivable figure : Skye Flyer, Inc., has weekly credit sales of $18,800, and the average collection period is 51 days. What is the average accounts receivable figure?
Portfolio of the two assets has an expected return : A stock has a beta of 1.2 and an expected return of 10%. The risk free asset currently earns 4%. If a portfolio of the two assets has an expected return of 8%, what is its beta?
Equation to forecast broussards additional funds : AFN equation Broussard Skateboard's sales are expected to increase by 15% from $8.2 million in 2013 to $9.43 million in 2014. Its assets totaled $3 million at the end of 2013. Use the AFN equation to forecast Broussard's additional funds needed for t..
What is the risk reduction of investing in the portfolio : You invest one-third of your wealth in each of three stocks. The expected return and standard deviation of each individual stock is 10 percent and 20 percent, respectively.  What is the expected return of the portfolio? What is the risk reduction of ..
What is current share price-required return on the stock : Far Side Corporation is expected to pay the following dividends over the next four years: $11, $9, $6, and $2. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever. Required: If the required return on the s..
What is the approximate real rate of interest : Squall deposits $2,000 in the bank at a 12% annual interest rate. Assume the inflation rate is 4%. What is the approximate real rate of interest?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the standard deviation of the market portfolio

In a two-stock capital market the capitalization of stock X is twice that of stock Y (this should tell you what the weights of stocks X and Y are in the economy). The standard deviation of excess returns on stock X is 35% and 55% on stock Y. the corr..

  Government securities and corporate bonds

Compare and contrast the differences between US Government securities and corporate bonds.

  Index understates the investors actual realized return

A US$ corporate bond can never have a yield lower than a US government bond with the same maturity. If interest rates rise a 10-year zero coupon bond would fall by about half as much as a 5-year zero coupon bond. The capital appreciation on the Nikke..

  Problem regarding the pv of the cash flow

You own an oil pipeline that generates $780,000 cash flow over the next year. The pipeline's operating costs are negligible and it is expected to last for a very long time. The interest rate is 4.45% but the volume of oil is expected to decline by..

  Book value versus market value filer manufacturing

Book Value versus Market Value Filer Manufacturing has 8.3 million shares of common stock outstanding. The current share price is S53, and the book value per share is $4. The company also has two bond issues outstanding. The first bond issue has a fa..

  How many in dividends were paid to shareholders

New Money inc. reported $50 million of net income and $770 of retained earnings. the previous retained earnings were $780. How many in dividends were paid to shareholders during that year? Assume that all dividends declared were paid.

  Income before interest-depreciation and taxes

The MoMi Corporation’s income before interest, depreciation and taxes, was $2.4 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 18% of pre..

  Income statement information is applicable for the entire

Balance sheet account information is as of the close of business for December 31, 2006 unless otherwise indicated. Income statement information is applicable for the entire calendar year 2006 unless otherwise indicated.

  Debt to take advantage of low interest rates and tax shield

WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt and no preferred stock, but would like to add some debt to take advantage of low interest rates and the tax shie..

  Will the change in price be smaller or larger

If interest rates fall from 6 percent to 5 percent, the price of the bond in the above problem will increase. Will the change in price (regardless of sign) be smaller or larger than in the above problem? Show how much by using the PV formula, Equatio..

  Estimate a stocks expected future rate of return

Estimate a stocks expected future rate of return. This problem leaves us unsure of the true value of rs - WACC calculations should be based on the before-tax costs of all the individual capital components.

  What will balance sheet look like after dividends are paid

The balance sheet for Intranet Browser Corp. is shown here in market value terms. There are 7500 shares of stock outstanding. The company has declared a dividend of £1.10 per share. what is the stock selling for today? What will the balance sheet loo..

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