What would be the return on the stock

Assignment Help Financial Management
Reference no: EM131147829

You are holding a stock that has a beta of 2.54 and is currently in equilibrium.

The required return on the stock is 32.25%, and the return on a risk-free asset is 5.0%.

What would be the return on the stock if the stock's beta increased to 3.10 while the risk-free rate and expected market return remained unchanged?

Reference no: EM131147829

Questions Cloud

What geographical and climate features characterize : What geographical and climate features characterize and shape the economy of west-central Europe? Make sure to identify the physical and climate features and explain how each have shaped the economy.
How many degrees of superheat does suggest : How many degrees of superheat does suggest that water can sustain at the low pressure of 1 atm? (It turns out that this calculation is accurate within about 10%.) What would Rb be at this superheat?
Summarize the strategic issues : Provide at least three statistics about the size of the motorcycle industry such as revenue, growth rate, number of units sold by manufacturer/country, etc. Summarize the strategic issues firms in this industry face and identify their biggest threats
Design short test on early art photography and pictorialism : Design a short test on early art photography and pictorialism. Post five multiple choice or fill in the blank questions with an answer key.
What would be the return on the stock : What would be the return on the stock if the stock's beta increased to 3.10 while the risk-free rate and expected market return remained unchanged?
How many watts can safely be supplied by the heater : How many watts can safely be supplied by the heater?
Compared to overtly stating preferences for particular race : In several of the EEOC cases presented in Chapter 13, managers clearly stated that applicants were “too old” or they "wanted a younger person." What factors may make people feel comfortable stating or writing down such preferences compared to overtly..
How large an embryonic bubble would be : How large an embryonic bubble would be needed to trigger nucleation in water in such a state.
What are the arithmetic and geometric returns for the stock : What are the arithmetic and geometric returns for the stock? - Arithmetic average return %-  Geometric average return %.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the current value of this stock to you

Knight Supply Corp. has not grown for the past several years, and management expects this lack of growth to continue. The firm last paid a dividend of $4.30. If you require a rate of return of 17.0 percent, what is the current value of this stock to ..

  What is the companys cost of preferred stock

Hetten house Company’s (HC) perpetual preferred stock sells for $105.50 per share, and it pays a $9.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.50% of the price paid by investors.

  Find the amount of the ordinary annuity

Find the amount (future value) of the ordinary annuity. (Round your answer to the nearest cent.) $1900/semi annual period for 7 years at 2.5%/year compounded semi annually

  Financial ratios and common-size financial statements

State why Walmart is a competitor of Target. Identify the reason that financial ratios and common-size financial statements are more important when contrasting the financial performance of Target to Walmart than the financial amounts reported on the ..

  About the issued bonds rate

Diesel company issued bonds with 12% coupon rate, semiannual coupon, $1,000 par value. Bonds mature in 40 years and are callable 5 years from now at $1120. Bonds are sold today at a price of $1300, and the yield curve is ownward sloping. What type of..

  Real risk-free rate of interest-what is treasury securities

The real risk-free rate of interest is 4%. Inflation is expected to be 2% this year and 4% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Treasury s..

  Determine the volatility of the stock

Assume Black-Scholes: The continuously compounded risk-free interest rate is equal to the rate of dividend continuously being paid out by the stock. Determine the volatility of the stock

  What are some sources of operating and financial leverage

Smith Company and Jones Company each sell 12,000 bottles at $ 3.00 per bottle. Production costs are $9,000 fixed costs plus $1 per bottle. Calculate the operating income (EBIT) for both companies. Using the information in Exercise 1, calculate the ea..

  Advantage of using the multiple-step income statement

What is an advantage of using the multiple-step income statement?

  Dividend growth models to estimate the cost of equity

S. Company has the following capital structure: 45% debt, 15% preferred stock and 40% common stock. Assume the risk-free rate is 8%, the beta stock is 1.3 and the market risk premium (Rm - Rf) is 12%, Determine the weighted average costs of capital (..

  What was it''s charge for depreciation and amortization

An enterprise recently reported an EBITDA of 8million and net income of 2.4 million, it had 2.0 million of interest expense, and corporate tax rate was 40%. What was it's charge for depreciation and amortization?

  What is the capital gains yield

Company Y expects to pay an annual dividend of $2.40 a share next year. The market value of the stock is $72 a share and the overall market return is expected to be 14.7 percent. What is the capital gains yield?

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