1. What must be the beta of a portfolio with E(rp) = 18%, if rƒ= 6% and E(rm) = 14%?

Q: Cox Media Corporation pays a 9 percent coupon rate on debentures that are due in 15 years. The…

A: Information Provided: Particulars Values Face value of the bond (FV)  $ 1,000.00 Annual…

Q: A deposit of $19,000 earns a continuous force of interest given by 0.028t for the first 5 years (t…

A: Data given: Deposit amount= $19000 Continuous force of interest for the first 5 years (r1)= 0.028t…

Q: Suppose that XTel currently is selling at $50 per share. You buy 800 shares using $30,000 of your…

A: As per the Honor code of Bartleby we are bound to give the answer of first three sub part only,…

Q: 3 Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the company's…

A: Hi student Since there are multiple subparts asked, we will answer only first three subparts.…

Q: 8. A family takes out a $255,515 mortgage at 4.32% interest compounded monthly with monthly payments…

A: We need to use PMT function in excel to calculate monthly payment       =PMT(RATE,NPER,-PV) Where…

Q: An investment manager based in Germany hedges a portfolio of UK gilts with a 3-month forward…

A: As per the given information: Current spot rate - GBP0.833/EUR90-day forward rate - GBP0.856/EURRise…

Q: 5. Rabbit Town Corp. is experiencing rapid growth. Dividends are expected to grow at 30% per year…

A: First three years' growth rate = 30% Fourth year = 20% Indefinite growth rate = 6% Required return =…

Q: Whadden National Bark is undertaking statec GAP analysis. In the one yoar time bucket, it holds $43…

A: Strategic gap analysis is a business management technique that requires an evaluation of the…

Q: The management of Kunkel Company is considering the purchase of a $25,000 machine that would reduce…

A: 1. Calculation of Net present Value   YEAR AMOUNT P.V FACTOR PRESENT VALUE         0 25,000 1…

Q: Question three Mzee have Tshs 800,000,000 in the bank account, of which he wants to invest in…

A: Meaning of Physical Assets: Physical Assets are tangible assets. The return of physical assets can…

Q: has total sales of $1,500,000 and costs of $993,500. Depreciation is $60,000 and the tax rate is 21…

A: Total sales=$15,00,000 Cost=$993,500 Depreciation=$60,000 Tax rate=21% Required: Operating cash…

Q: a)  Compute the present value of an annuity due that pays £2,000 annually, at a rate of 3% p.a.…

A: An annuity due is that annuity in which the cash flow occurs at the beginning of each period.   To…

Q: If Treasury bills are currently paying 6.25 percent and the inflation rate is 1.8 percent, what is…

A: The real rate refers to the rate of interest that is being received by the investors, and lenders,…

Q: i)discuss accounting issues in risk management, and explain the following terms: fair value hedge,…

A: “Since you have posted multiple questions with multiple sub parts,we will provide the solution only…

Q: the interest tax shield and the probability of distress for different level V of interest tax shield…

A: To find the optimal level of debt for the company, we need to determine the level of debt that…

Q: d calculation fomula different both times

A: If a firm has EBIT in perpetuity, then the value of the firm is calculated as shown below. Value of…

Q: How does capital protect a bank from failure?  Why are banks currently holding capital well above…

A: Introduction: Capital is a bank's own funds and it is the money obtained from its shareholders and…

Q: ou have a portfolio that is equally invested in Stock F with a beta of 1.09, Stock G with a beta of…

A: Portfolio beta will be the sum of multiply of weight and beta of each stock. Portfolio Beta =Weight…

Q: What is the expected return of your portfolio? (Do not round intermediate calculations and enter…

A: Expected return of the portfolio = (Weight of W*Expected return of W)+(Weight of X*Expected return…

Q: ABC Co.'s current ratio is greater than 1. Purchasing raw materials on credit would: A. increase the…

A: A current ratio can be determined by dividing current assets by the current liabilities. Formula,…

Q: ABC Co. has average shareholders' equity of 1,000,000, which includes $200,000 par value of 12%…

A: Average shareholders' equity P1,000,000 Less: Preferred shares P200,000 Ordinary stockhodler's…

Q: Denim Industries can borrow its needed financing for expansion using one of two foreign lending…

A: The effective interest rate is an important concept in finance .The effective  interest rate…

Q: a) A Zero Coupon Bond with face value £100 and maturity in 4 years is sold for £85. Find its (gross)…

A: Here, Particulars Values Present value of bond (PV)  £85.00 Face value  (FV)  £100.00 Time…

Q: An investment fund contains £100,000 at time zero. After six months its value has grown to £105,000…

A: The time-weighted rate of return refers to the return that the investment provides on average. It…

Q: Kennedy Limited is an all-equity publicly listed firm with 600,000 shares currently on issue trading…

A: Net Income of the company refers to the Net operating Income available for the shareholders after…

Q: Mr Winston entered into an agreement that gave him the right to purchase stationery for R12 000.…

A: The fact that Mr. Winston did not exercise the option during the current assessment year does not…

Q: A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1…

A: years Project S Project L 0 -$1000 -$1000 1 $877.39 $0 2 $250 $240 3 $10 $420 4 $15…

Q: Consider the cash flow shown in the accompanying diagram. If the value of C is $937, calculate the…

A: The PV of an investment refers to the collective value of the cash flows of the investment assuming…

Q: The following assumptions are made for each Investigation: • The original mortgage is $300,000…

A: Present value is Determined by discounted value of the future cash flows at the present date. Future…

Q: Suppose you wish to have $17,250 in 5 years. Use the present value formula to find how much you…

A: Compound = semiannually = 2 Future value = fv = $17,250 Time = t = 5 * 2 = 10 Interest rate = r = 5…

Q: Approximately, what is the value of (P) if F=114120, n=8 years, and i= 7% per year? O a. 79703 b.…

A: Present value is the current value of certain amount of future money at a required rate of return or…

Q: With everything else held constant, which of the following events should increase the internal rate…

A: IRR refers to internal rate of return. It is the rate at which net present value of a project is…

Q: ou want to open a checking account with a $500 deposit. You estimate you will write 16 checks a…

A: We open bank accounts so that we can deposit our money there, write checks to pay our bills etc.…

Q: C a s e  1 . J a n e   M c D o n a l d ,   a   f i n a n c i a l   a n a l y s t   f o r   C a r r o…

A: The cash budget is prepared by businesses to know the cash receipts, payments, and closing cash…

Q: Which would increase a firm’s return on equity? A. Issuance of 12% bonds and investing the proceeds…

A: Return on equity (ROE) is a financial measurement that measures company's profitability by the…

Q: Suppose the interest rate is 9.3% APR with monthly compounding What is the present value of an…

A: Here, Particulars Values Interest rate 9.30% Number of years 5.00 Number of compounding…

Q: The balance sheet for Quinn Corporation is shown here in market value terms. There are 10,000 shares…

A: Market value of equity=$404,200 No. of shares outstanding= 10,000 Dividend declared per share= $1.90…

Q: Unrelated to the lemon juice project, Allied is upgrading its plant and must choose between two…

A: Introduction: Mutually Exclusive Set: i) Only one of the feasible project can be selected out of…

Q: You are bearish on Telecom and decide to sell short 100 shares at the current market price of $36…

A: Selling Share in Bearish market No. of share = 100 Current Market price = $36 Initial Margin = 50%…

Q: Approximately, what is the value of (P) if F=114120, n=8 years, and i= 7% per year? O a. 79703 b.…

A: Given, P is present value. F is future value, i is interest rate and n is number of periods.   F =…

Q: 2. You would like to retire on $15,000 per month with the first retirement check coming at the end…

A: Present value of annuity. PV = A * 1-(1+r)-nr where , PV = present value of annuity A = Periodic…

Q: hree Zero Coupon Bonds (ZCB) are issued on the market. They each have face value of £100 and…

A: Annual Effective yield of bonds: Face value = 100 Sale Value = 99.01 Maturity period = 1 year Sale…

Q: Stock options on Microsoft, September 4, 2019 Expiration Strike Call Put 27-September-2019 130 8.65…

A: A call option is a type of financial contract that gives the buyer the right, but not the…

Q: Beginning three months from now, you want to be able to withdraw $2,200 each quarter from your bank…

A: Present value refers to an amount of the an asset that will be present at some future date. It…

Q: Green Lantern Enterprises has just completed an initial public offering. The firm sold 1,500,000 new…

A: Underpricing cost = $5,250,000 Spread = $1.18 No. of shares offered (Primary offering) = 1,500,000…

Q: Assume that a firm had such serious financial problems that it was about to be liquidated after a…

A: Explanation: Bondholders- Bondholders are creditors. They lend capital to the issuing entity.…

Q: Crane Corporation is considering investing in a new facility. The estimated cost of the facility is…

A: IRR Internal Rate of return is the rate of return at which the project will be at break even point…

Q: Stock Y has a beta of 0.9 and an expected return of 11.4 percent. Stock Z has a beta of 1.5 and an…

A: Expected return is an important metric in investment analysis, as it helps investors assess the…

Q: The Hastings Sugar Corporation has the following pattern of net income each year, and associated…

A: When the company receives profits and distributes them among the shareholders. That share of profit…

Q: Your company has been approached to bid on a contract to sell 5,000 voice recognition (VR) computer…

A: Here, Tax Rate is 23% Required Return is 10% Variable Cost is $85 Required NPV is $100,000

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.