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Portfolio beta
A mutual fund manager has a $20 million portfolio with a beta of 0.80. The risk-free rate is 4.75%, and the market risk premium is 4.0%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 17%. What should be the average beta of the new stocks added to the portfolio? Do not round intermediate calculations. Round your answer to two decimal places. Enter a negative answer with a minus sign.
A project has cash flows of +$400, -$300, and -$300 in consecutive years. The prevailing interest rate is 5%. Should you take this project?
ABC corp. has equity with a market value of $750 million, debt with a market value of $330 million, and future operating lease commitments with a present value of $400 million. The firm also has a Beta of 1.2, a pre-tax cost of debt of 8%, and a marg..
You purchase a bond with a coupon rate of 8.7 percent and a clean price of $870. If the next semiannual coupon payment is due in two months, what is the invoice price?
What is the future value of an annuity of 17 deposits of $2300 each year with nominal rate of interest being 10% compounded continuously?
Suppose you buy a 7.8 percent coupon bond today for $1,080. The bond has 5 years to maturity. What rate of return do you expect to earn on your investment? What is the annual realized yield on your investment?
Which of the following is closest to the equivalent annual worth of a project with an initial cost of $8,000, annual maintenance costs of $350 and a salvage value of $2,000? Assume an interest rate of 8% per year and that the project has a 8-year lif..
What is the proper cash flow amount to use as the initial investment in fixed assets when evaluating the project.
You buy a share of The Ludwig Corporation stock for $22.30. You expect it to pay dividends of $1.01, $1.15, and $1.3094 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $29.62 at the end of 3 years. Calculate the growth rat..
The stock of Big Joe's has a beta of 1.66 and an expected return of 13.40 percent. The risk-free rate of return is 5.9 percent. What is the expected return on the market?
from books of aggarwal bors following information has been extracted rs. sales 240000 variable costs 144000 fixed costs
A proposed investment must earn at least as much as the ______ if it is to be deemed acceptable. Betas are exact measurements. If a stock has a very low beta, it is most apt to maintain that beta in the future. The expected future risk premium is eas..
You are a hedger who takes a long position in an oil futures contract on November 1, 2009 to hedge an exposure on March 1, 2010. The initial futures price is $64. On December 31, 2009 the futures price is $63. On March 1, 2010 it is $69. The contract..
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