What is the appropriate required return of csb

Assignment Help Business Management
Reference no: EM133055813

A) CSB Inc. has a beta of 1.35.  If the expected market return is 14.5% and the risk-free rate is 5.5%, what is the appropriate required return of CSB (using the CAPM)? 

B) Cindy is considering investing in a share and is aware that the return on that investment is particularly sensitive to how the economy is performing.  Her analysis suggests that four states of the economy can affect the return on the investment.  Using the table of returns and probabilities below, calculate the expected return and the standard deviation of the return on Cindy's investment. (4 marks)

Situation

Probability

Return

Boom

0.2

25%

Good

0.4

15%

Level

0.3

10%

Slump

0.1

-5%

C) Interpret the result for Cindy, explaining to her what your calculations mean. 

Reference no: EM133055813

Questions Cloud

Compute the approximate yield to maturity : Bonds issued by the Tyler Food chain have a par value of $1,000, are selling for $1,210, and have 20 years remaining to maturity Annual interest payment is 14.5
Effects of split ratings on financial markets : Critically analyse the reasons for split ratings across rating agencies and the effects of split ratings on financial markets' prices and agencies' rating dynam
Calculate the amount of taxes payable : A year and half ago, Max purchased 5,000 shares in a mutual fund called Epic Inc. for $15.75/share. Due to COVID-19, the stock was an epic failure and Max decid
Prepare an incremental analysis for the special order : Fixed costs for the period were costs of goods sold $960,000, and selling and administrative expenses $225,000. Prepare an incremental analysis for the special
What is the appropriate required return of csb : If the expected market return is 14.5% and the risk-free rate is 5.5%, what is the appropriate required return of CSB (using the CAPM)?
What is the company total cost of issuing the securities : IPO pricing: Myriad Biotech plans a $114 million IPO with an offer price of $5.10 per share, underwritten at $4.30.
Calculate the operating cash flows for the project : The airline that you work for is considering flying a new route from Brisbane to Vancouver. Calculate the operating cash flows for the project
What is the npv of a investment opportunity : 1) Thomas Green is using net present value (NPV) when evaluating investment opportunities. His required rate of return is 11.07 percent.
What is the incremental annual cash flow from operations : Depreciation costs of the production plant are $51,000 per year. The marginal tax rate is 40 percent. What is the incremental annual cash flow from operations

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

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