What is the current rate of return for investing in company

Assignment Help Financial Management

Reference no: EM131530301

Company Q has earnings of $3.00 per share, a market price of $25, and a beta of 1.25. The risk-free rate is 3% and the risk premium for the market as a whole is 5%.

?1. What is the general formula for the securities market line (for te market as a whole?)

?2. What is the expected return on the market?

3. Using the formula from #1, what is the "reward-to-risk ratio" for the market as a whole?

4. What is the current P/E ratio for Company Q?

5. What is the current rate of return for investing in company Q?

?6. What is the current "reward-to-risk ratio" for Company Q?

?7. If the market remains stable, what will be the expected return eventually become for Company Q?

?8. At this new expected return for Company Q, what will be its new stock price?

Reference no: EM131530301

Questions Cloud

Characteristics of stakeholder and determine all stakeholder : Describe the key characteristics of a stakeholder and determine all the stakeholders within the PharmaCARE scenario

Evaluating project for tiff-any golf club : You are evaluating a project for The Tiff-any golf club. What change in NWC occurs at the end of year 1?

Explain the authors organizational structure for the study : Explain the authors organizational structure for the study - Write in standard American English appropriate for audience using correct grammar

Show the effect of the quota on the market for swordfish : The waters off the North Atlantic coast were once teeming with fish. But because of overfishing by the commercial fishing industry.

What is the current rate of return for investing in company : What is the expected return on the market? What is the current rate of return for investing in company Q?

Steps to staying safe and healthy : Choose three (3) topics that you think might apply to children with special needs and share them.

What exchange ratio between the two stocks : What exchange ratio between the two stocks would make the value of a stock offer equivalent to a cash offer of pound 45 million?

Components of an expected return on a risky investment : Identify three main components of an expected return on a risky investment.

What must a party prove to win a false advertising lawsuit : What is deceptive advertising? How could it apply to this situation? What must a party prove to win a false advertising lawsuit

User Account

All Pages