### What is the expected return on the market

Assignment Help Financial Management
##### Reference no: EM13682

Question

If the beta of Exxon Mobil is 0.65, risk-free rate is 4% and the market rate of return is 14%, evaluate the expected rate of return for Exxon.

Question

Given the following data for the a stock: risk-free rate = 5%; beta (market) = 1.5; beta (size) = 0.3; beta (book-to-market) = 1.1; market risk premium = 7%; size risk premium = 3.7%; and book-to-market risk premium = 5.2%. evaluate the expected return on the stock using the Fama-French three-factor model.

Question

Johnson Paint stock has an expected return of 19% with a beta of 1.7, while Williamson Tire stock has an expected return of 14% with a beta of 1.2.  Assume the CAMP is true.

(a). What is the expected return on the market?
(b). What is the risk-free rate?
(c). What is the market risk premium?

Question

The market value of Charcoal Corporation's common stock is \$20 million, and the market value of its risk-free debt is \$5 million. The beta of the company's common stock is 1.25, and the market return (Km) is 13%. If the Treasury bill rate (Rf) is 5%, what is the company's cost of capital? (Assume no taxes.)

Question

A project has an expected risky cash flow of \$300, in year 3. The risk-free rate is 5%, the market risk premium is 8% and the project's beta is 1.25. evaluate the certainty equivalent cash flow for year 3.

Question

The equity accounts of Bio-Tech Company is as follows:

Suppose the firm sells 2,000,000 new (additional) shares at a price of \$19 per share. What is the new value of Common Shares account?  What is the new value of the additional paid-in-capital account?

Question

Given the following data for U&P Company: Debt (D) = \$100 million; Equity (E) = \$300 Million; rD = 6%; rE = 12% and TC = 30%. evaluate the after-tax weighted average cost of capital (WACC):

Question

Learn and Earn Company is financed entirely by Common stock that is priced to offer a 20% expected return. If the company repurchases 50% of the stock and substitutes an equal value of debt yielding 8%, what is the expected return on the common stock after refinancing?

Question

Consider two firms, With and Without, that have identical assets that generate identical cash flows.  Without is an all-equity firm, with 1 million shares outstanding that trade for a price of \$24 per share.  With has 2 million shares outstanding and \$12 million dollars in debt at an interest rate of 5%.  According to MM Proposition 1, what is the stock price for With?

Question

Consider a one-year, \$1000, zero-coupon bond issued. Assume that the bond payoffs are uncertain. There is a 50% chance that the bond will repay its face value in full and a 50% chance that the bond will default and you will receive \$900. Thus, you would expect to receive \$950.Because of the uncertainty, the discount rate is 5.9%.evaluate the promised yield on the bond.

#### Questions Cloud

 Modern symmetric encryption schemes : Pseudo-random generators, pseudo-random functions and pseudo-random permutations Evaluate and output the value in the given base : Write C program that will input two values from the user that are a Value and a Base with which you will evaluate and output the Value in the given Base. Intermediate macroeconomics : Use the IS/LM model and the IS-PC-MR model to explain what monetary policy to pursue. Prepare the bank reconciliation for company : Prepare the bank reconciliation for company. What is the expected return on the market : What is the expected return on the market and What is the risk-free rate? Describe the management process : Describe the management process and identify the skills required to manage business organizations. Describe the features or characteristics of product : Describe the features or characteristics of your product or service. Is global warming an opportunity or trap : IS GLOBAL WARMING AN OPPORTUNITY OR TRAP? Glut to blame for farm-gate milk price falls : Glut to blame for farm-gate milk price falls, not big supermarkets.

### Write a Review

#### Financial Management Questions & Answers

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

#### Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

Prepare a business plan that would be useful for launching your product and obtaining financial and managerial support from potential backers.

#### Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

#### Financial assessment of mk robe-stones limited business plan

Financial Assessment of MK Robe-Stones Limited Business Plan.

#### Report annual cash flows

Briefly explain why you are using the computational method chosen. (Hint: you will need to decide to use the APV or WACC formula.

#### Create a portfolio of analytical reference materials

Create a portfolio of analytical reference materials including the financial reports for at least five years. This is your analytical permanent file for the selected company.

#### Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

#### Compute the cost of equity financing

This assignment shows how to Compute the cost of equity financing and aslo Compute the Weighted Average Cost of Capital.

#### What is the average direct labor cost rate

What is the average direct labor cost rate and What is the overhead rate.

#### Determine the constant growth rate in dividends

Arbitrage Financial is offering two possible investments with the same level of risk.

#### Complute the capital asset pricing model

Compute the CAPM-β of the portfolio with respect to the market