What is the required rate of return on the investors portfo

Assignment Help Financial Management
Reference no: EM13915282

An investor is forming a portfolio by investing $55,000 in stock A that has a beta of 1.33, and $75,000 in stock B that has a beta of 0.95. The market risk premium is equal to 6.30% and Treasury bonds have a yield of 4.25%. What is the required rate of return on the investor’s portfolio?

Reference no: EM13915282

Questions Cloud

The marginal product of labor : Consider the production function Q = 20K1/2L1/2. The firm operates in the short run with 16 units of capital.f. If the firm produces 160 units, determine the units of labor that are employed, the average product of labor, the marginal product of labo..
What is a fair price per share : Benjamin Garcia's start-up business is succeeding, but he needs $209,000 in additional funding to fund continued growth. Benjamin and an angel investor agree the business is worth $836,000 and the angel has agreed to invest the $209,000 that is neede..
Are the results related to the hypothesis : Are the results related to the hypothesis? Is the discussion of the results consistent with the actual results? Does the discussion provide closure to the initial hypothesis presented by the author?
State the null and alternative hypotheses : A soft-drink machine at a steak house is regulated so that the amount of drink dispensed is approximately normally distributed with a mean of 200 milliliters. (a) State the null and alternative hypotheses if we wish to check if the machine is calib..
What is the required rate of return on the investors portfo : An investor is forming a portfolio by investing $55,000 in stock A that has a beta of 1.33, and $75,000 in stock B that has a beta of 0.95. The market risk premium is equal to 6.30% and Treasury bonds have a yield of 4.25%. What is the required rate ..
Calculate the payback period and Calculate the NPV : McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $730 per set and have a variable cost of $330 per set. The company has spent $143,000 for a marketing study that determined the company will sell 55,000 sets per year ..
What was the sales price per share of the : a. What was the sales price per share of the original stock issue?
Some debt in its capital structure : Sometimes, the management of a corporation will waste a firm’s resources on things like lavish office furnishings and a corporate jet. Is this behavior more likely to occur when the firm is 100% equity financed or when it has some debt in its capital..
N annuity is defined as series of payments of fixed amount : An annuity is defined as a series of payments of a fixed amount for a specific number of periods. Thus, $100 a year for 10 years is an annuity, but $100 in Year 1, $200 in Year 2, and $400 in Years 3 through 10 does not constitute an annuity. However..

Reviews

Write a Review

Financial Management Questions & Answers

  Show the preset value of the present collection experience

Using NPV calculation, show the preset value of the present collection experience and calculate the NPV of the proposed 2/10, net-30 terms.

  Net present value or internal rate of return

You are considering purchasing a house to rent to students. Would you use net present value (NPV) or internal rate of return (IRR) to evaluate this type of project?

  Calculate the EAC for each machine

Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,084,000 and will last for six years. Variable costs are 40 percent of sales, and fixed costs are $225,000 per year. Calculate the EAC for..

  Bond makes annual payments and matures

You purchased one EAW, Inc. 6 percent coupon bond one year ago for $1,020. The bond makes annual payments and matures four years from now. You sell the bond today when the required return is 5 percent. The inflation rate was 2.8 percent over the past..

  What constant rate is the stock expected to grow

Mitts Cosmetics Co.'s stock price is $56.21, and it recently paid a $2.25 dividend. This dividend is expected to grow by 18% for the next 3 years, then grow forever at a constant rate, g; and rs = 12%. At what constant rate is the stock expected to g..

  Possible reasons for managements change in emphasis

Present a brief side-by-side comparison of the commentary in the MD&A of 2013 to that of 2012. Were the same business drivers discussed? Were they assigned the same importance by management? Discuss any variations you observed, and the possible reaso..

  Debt ratio and interest-bearing debt ratio

Analyse the capital structure of I Icy. lot-Packard using both the debt ratio and interest-bearing debt ratio.

  Retained earnings break point for marginal cost of capital

Rolodex Inc. Balance Sheet (in millions) shows retained earnings of $110 and $20 Common Stock (20 million shares at par). Rolodex expects to generate $140 million in net income and pay $2 per share in dividends. What is Retained Earnings for the purp..

  What is the current value of one share of this stock

The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 19 percent a year for the next 4 years and then decreasing the growth rate to 3 percent per year. The company just paid its..

  Security expected return-variance-standard deviation

Assume that an individual can either invest all of his resources in one of the two securities, A or B; or, alternatively, he can diversify his investment between the two. Calculate each security's expected return, variance and standard deviation. Cal..

  What was the heirs tax liability

The date of death for a widow was 2012. If the estate was valued at $7,100,000 and the estate was taxed at 35 percent. What was the heir’s tax liability? (Round your answer to the nearest dollar amount)

  The bond is a combination of a regular bond

A bond issued by Standard Oil worked as follows. The holder received no interest. At the bond’s maturity the company promised to pay $1,000 plus an additional amount based on the price of oil at that time. The additional amount was equal to the produ..

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