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Stock A has a beta of 0.8 and Stock B has a beta of 1.2. 50% of Portfolio P is invested in Stock A and 50% is invested in Stock B. If the market risk premium (rM-rRF) were to increase but the risk-free rate (rRF) remained constant, which of the following would occur?
a. The required return would increase for Stock B but decrease for Stock A.
b. The required return would decrease by the same amount for both Stock A and Stock B.
c. The required return on Portfolio P would remain unchanged.
d. The required return would increase for both stocks but the increase would be greater for Stock B than for Stock A.
e. The required return would increase for Stock A but decrease for Stock B.
Assume a corporation has earnings before depreciation and taxes of $82,000, depreciation of $45,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company.
BioScience,Company, will pay a common stock dividend of $3.20 at the end of theyear. The required return on common stock is 14%. The firm has a constant growth rate is 9%.
If Whitewall is expected to increase its annual dividend by 2 percent per year into the foreseeable future and the current price of Whitewall's common shares is $11.66, what is the cost of common equity for Whitewall?
In minimizing cost,how many orders would be made each year? What would be the annual ording cost?
question 1 interest first city bank pays 6 simple interest on its savings account balances whereas second city bank
1.find the future value of 10000 invested now after five years if the annual rate is 8 percent.nbspa.what would be the
Capital budgeting is an evaluation of project based on three main criteria, Net Present Value (NPV); Internal Rate of Return (IRR); Payback Period. What is the single best capital budgeting decision criterion?
Suppose that the CAPM is a good description of stock price returns. The market expected return is 7% with 10% volatility and the risk-free rate is 3 percent.
construct an amortization schedule for the first three months and the final three months of payments for a 30-year 7
What is meant by an indexing portfolio strategy and what is the justification for this strategy? How might it differ from another passive portfolio?
How should he compute his required initial investment at the beginning of the first year if the fund earns 10% compounded annually?
The current value of Digital stock is $44 per share. You are offered a forward value for Digital stock to be delivered in one year of $42. The forward value is lower than the spot price because the market anticipates a sharp decline in the price of D..
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