Risk-return and their relationship

Assignment Help Financial Management
Reference no: EM131354079

Risk, Return, and Their Relationship (LG9-3, LG9-4) Consider the following annual returns of Molson Coors and International Paper: Molson Coors International Paper Year 1 22.8 % 5.8 % Year 2 − 9.7 − 18.8 Year 3 43.0 − 0.6 Year 4 − 9.5 27.9 Year 5 17.5 − 12.4 Compute each stock’s average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.) Molson Coors International Paper Average return % % Standard deviation % % Coefficient of variation Which stock appears better? International Paper Molson Coors

Reference no: EM131354079

Questions Cloud

Should the project be accepted or rejected-accepted rejected : Compute the NPV statistic for Project Y if the appropriate cost of capital is 13 percent. Project Y Time: 0 1 2 3 4 Cash flow –$8,800 $3,510 $4,340 $1,680 $460 NPV $ Should the project be accepted or rejected? Accepted Rejected
Marginal tax rate-what is after-tax cost of debt : Neotech Corporation’s 12 percent coupon rate, semiannual payment, $1,000 par value, 30-year bonds currently sell at a price of $1,353.54. If its marginal tax rate is 40 percent, what is Neotech’s after-tax cost of debt?
Under and overvalued stock : A manager believes his firm will earn a 20.30 percent return next year. His firm has a beta of 1.36, the expected return on the market is 15.90 percent, and the risk-free rate is 5.90 percent. Compute the return the firm should earn given its level o..
Firm to sell its inventory assuming that sales are on credit : Al's Sport Store has sales of $3,170, costs of goods sold of $2,170, inventory of $506, and accounts receivable of $442. How many days, on average, does it take the firm to sell its inventory assuming that all sales are on credit?
Risk-return and their relationship : Consider the following annual returns of Molson Coors and International Paper: Molson Coors International Paper Year 1 22.8 % 5.8 % Year 2 − 9.7 − 18.8 Year 3 43.0 − 0.6 Year 4 − 9.5 27.9 Year 5 17.5 − 12.4 Compute each stock’s average return, standa..
Variable growth-discount rate is appropriate for this stock : A fast-growing firm recently paid a dividend of $0.85 per share. The dividend is expected to increase at a 15 percent rate for the next three years. Afterwards, a more stable 10 percent growth rate can be assumed. If an 11 percent discount rate is ap..
Financing plan for next year include sale of long-term bonds : The McDaniel Company’s financing plans for next year include the sale of long-term bonds with a 12 percent coupon. The company believes it can sell the bonds at a price that will provide a yield to maturity of 10 percent. If the marginal tax rate is ..
Uses the gross method and perpetual inventory system : Boston Dollar Store uses the gross method to record purchase discounts and uses a perpetual inventory system. Boston engaged in the following transactions during April: 4/12
What is the estimated cost of equity : The This Class Is SoFun Company needs to determine the cost of capital rate to be used in the evaluation of new projects. The company has an existing bond issue: $1,000 par value, 5% coupon rate paid annually, 20-year bond, currently sells for $885.3..

Reviews

Write a Review

Financial Management Questions & Answers

  Explain the positive relationship between risk and return

Explain the positive relationship between risk and return.. Interpret standard deviation and probability distributions as a measure of risk. Explain diversifiable (business-specific or unsystematic) risk versus non-diversifiable (systematic) risk.. I..

  Calculate the price of a 3 month european put option

Calculate the price of a 3-month European put option on a non-dividend-paying stock with a strike price of $50 when the current stock price is $50, the risk-free interest rate is 10% per annum, and the volatility is 30% per annum.

  Individual of understanding time value of money concepts

What is the importance for an individual of understanding time value of money concepts? For a corporate manager? Under what circumstance would the time value of money be irrelevant?

  Coupon bonds on market-what is the effective annual yield

PK Software has 8.4 percent coupon bonds on the market with 23 years to maturity. The bonds make semiannual payments and currently sell for 110.25 percent of par. What is the effective annual yield?

  What should the dollar pnut exchange rate be in 2013

If the actual dollar-pnut exchange rate is $1/pnut in 2013, is the pnut overvalued or undervalued relative to PPP?

  What is the current share price

Marcel Co. is growing quickly. DIvidends are expected to grow at a 30 percent rate for the next three years, with the growth rate falling off to a constant 6 percent thereafter. If the required return is 13 percent and the company just paid a $1.80 d..

  What is marys effective annual rate

Mary purchased 100 shares of Sweet Pea Co. stock at a price of $48.37 six months ago. She sold all stocks today for $43.39. During that period the stock paid dividends of $1.02 per share. What is Mary’s effective annual rate? Round the answers to two..

  Recovery asset-calculate after-tax cash flow at disposal

Reversing Rapids Co. purchases an asset for $102238. This asset qualifies as a five-year recovery asset under MACRS. The five-year expense percentages for years 1, 2, 3, and 4 are 20.00%, 32.00%, 19.20%, and 11.52% respectively. Reversing Rapids has ..

  Calculate each projects payback period-NPV and IRR

You have been retained as a management consultant by a local specialty retailer, to analyze two proposed capital investment projects, projects X and Y. Project X is a sophisticated working capital and inventory control system server, specifically des..

  What is the yield to maturity of this bond

A Treasury bond with the longest maturity (30 years) has an ask price quoted at 99:01. The coupon rate is 4.30 percent, paid semi annually. What is the yield to maturity of this bond?

  Expected return on the market

A stock has an expected return of 11 percent, its beta is 1.20, and the risk-free rate is 4.4 percent. What must the expected return on the market be?

  Equity viewed as option-black-scholes option pricing model

Fethe Inc. is a custom manufacturer of guitars, mandolins, and other stringed instruments and is located near Knoxville, Tennessee. Fethe's current value of operations, which is also its value of debt plus equity, is estimated to be $5 million. Using..

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