13) A stock has an expected return of 6.40%, the risk-free rate is 3% and the return on the market is 7.10%. What is this stock's beta? Multiple Choice 1.56 .9 .83 2.37
Q: ABC common stock is expected to have extraordinary growth in earnings and dividends of 18% per year…
A: In the given case, the growth rate for the next 2 years and the constant growth are given . And, the…
Q: The target company has sales of $2 million, net income of $1 million, and cash flows to equity of…
A: We need to use P/E multiple valuation formula below for calculation of valuation P/E multiple…
Q: Recall that the risk-neutral probability of an asset corresponds to the probability for which the…
A: Current Asset value S0 = 100 Risk free rate (rf) = 0% Upmove probability = p…
Q: An investment has the potential of eaming you $5000 at a 15 percent probability, $3000 at a 45…
A: Expected value of investment = Summation of potential investment earnings × Probability of each…
Q: Due to the political and country risks involved in international business, firms should: O A do…
A: Political risks are the country specific risks that arise during investing internationally. These…
Q: Suppose you are trying to raise $63415947 to fund a project and you are going to use 42% debt. An…
A: Ans 1) Amount to be raised = 6,34,15,947 Amount to…
Q: that an analyst has looked at a random sample of 50 companies in the S&P 500 to understand the…
A: Standard Error is standard deviation or an estimate of standard deviation of a sample used for…
Q: Suppose the common stock of United Industries has a beta of 0.83 and an expected return of 8.7…
A: Expected Return = Risk Free Rate + (Beta x Market Risk Premium)
Q: Omega Company issued $100,000 of 6% bonds when the market rate of interest was 4.6%. The proceeds…
A: Under the effective interest rate method, the amount of bond premium is amortized to interest…
Q: You recently paid $13,500 for an investment that promises to pay S675 at the end of each of the next…
A: Investment Amount = 13500 Annual payment = 675 Tenure = 6 years…
Q: Convertible exchangeable preferreds give the holder the sole right to exchange their preferred stock…
A: Preferred share are all such shares which will be providing with the right to have preference…
Q: A 9.75% coupon bond is priced at 103.52. The last semi-annual coupon payment was made on February…
A: When a bond is between coupon payment periods, its price is made up of two parts one is flat price…
Q: Microbiotics currently sells all of its frozen dinners cash-on-delivery but believes it can increase…
A: Companies sell goods to customers to earn profit. This may be sold for credit or cash. If a company…
Q: You want to minimize your current tax bill by maximizing your contributions to your Multiple Choice…
A: There are certain investments that present an immediate tax benefit to the investor. In other…
Q: Determine the standard deviation of the expected return. (Do not round intermediate calculations and…
A: To determine the standard deviation, we will first of all have to compute the expected return here.…
Q: . Does Put-Call parity hold for American paying stock? options on a non-dividend Briefly explain
A: Put call parity is a relationship which will be reflecting that the price of put option and call…
Q: Beckham Corporation has semiannual bonds outstanding with nine years to maturity that are currently…
A: A bond is a type of debt security. Borrowers, such as businesses or governments, issue bonds to…
Q: The Long Leading Index is intended to provide earlier signals of major turning points of the…
A: The Long Leading Index is a composite economic indicator that is designed to provide earlier signals…
Q: Explain the WACC in the context of a hurdle rate, return on invested capital (ROIC), an optimal…
A: WACC stands for a weighted average cost of capital and refers to the average cost taht is expected…
Q: On January 1, 2018, PNB and Allied Bank entered into a contract of merger wherein PNB will issue…
A: PNB and Allied Banks
Q: When a dividend has been declared , it becomes a liability of the firm and can not be recinded…
A: Dividend payments are distribution of profits or earnings by a company to its shareholders. The…
Q: 6. You currently own a technology stock that has an expected return of 14.9% and its beta is 1.44.…
A: CAPM is the basic theory that links risk and return for all assets. CAPM equation is rs =Rf…
Q: A stock has an expected return of 6.40% , the risk-free rate is 3% and the return on the market is…
A: The beta is a risk measurement used to define the movement of stock with respect to the market. If…
Q: the ratio which includes the average credit period received by the a business firm is known as…
A: The ability of a business to effectively manage its assets is essential for long-term success. To…
Q: In measuring the implementation Shortfall (IS), a common benchmark price for hypothetical The…
A: Hypothetical trading refers to the market that is used for surveying the product and fulfilling…
Q: Describe three possible appreciating and three depreciating investments that are available for most…
A: Financial managers are the persons who are responsible for the financial aspects of an organization…
Q: Presented below are data for an electrical repair shop for next year. Time charge Material loading…
A: Profit margin refers to the earnings of a business on a sale. The profit margin is the difference…
Q: Bansi Breken is a financial institution that provides loans to businesses. It rejects an iron ore…
A: Bansi Breken is a financial institution that provides loans to businesses. To assess a company's…
Q: A firm is considering a project with the following cash flows: $1000, +$9000, $4000, +$1000, $1000,…
A: Internal rate of return is a concept used in capital budgeting to determine the relative…
Q: A debt of $10,000 with interest at 8% compounded quarterly is to be repaid by equal payments at the…
A: The amount of Debt is $10,000 The interest rate is 8% Compounded Quarterly The time period is 2…
Q: Jen Enterprise issued $3,000,000, 5%, 20- year bonds on a date when the market rate of interest was…
A: Bond Value is determined as the sum of the present value of all the expected interest payments and…
Q: Stockinger Corporation has provided the following information concerning a capital budgeting…
A: Cash Flow: Cash flows represent the cash produced by a firm from its normal business operations.…
Q: Stage of risk management that is exemplified, the Var is applied at a 97.5% confidence level, in…
A: Confidence level-It is expressed as a % and it indicates how often the VaR falls within the…
Q: 20,000
A: Spot price = 2500 / 1000 KG The future of stock palm oil is 1000 kg lot. Take it is being sold…
Q: Factor Company is planning to add a new product to its line. To manufacture this product, the…
A: Net present value(NPV) is the difference between present value of all cash inflows and initial…
Q: One company agrees to pay to another company cash flows equal to interest at a predetermined fixed…
A: Swaps: Swaps are derivative financial instrument contracts between two parties allowing the…
Q: Bernard co. has 9% coupon bonds on the market that have 15 years left to maturity. The bonds will…
A: We need use "PV" function in excel to calculate bond price. Bond price (PV) =-PV(RATE,NPER,PMT,FV)…
Q: As per the latest tax update, the aggregate amt of distributions recvieved by an indivivdual,tat may…
A: The start of the pandemic had effected the financials of individuals and had affected the economy.…
Q: Consider the case of the Cast Iron Company. On each nondelinquent sale, Cast Iron receives revenues…
A: Granting credit allows the other party to defer payment in exchange for interest or cost of credit.…
Q: Company, a financial institution, allows Integrity Company to borrow P1,300,000 with 8% interest.…
A: The effective interest rate is the actual rate of interest on the loan. This is calculated on the…
Q: You plan to submit a bid for a 6-year contract. To complete the project, you will need $238,500…
A: The company may bid for a contract but it has to consider whether the bid price is beneficial to the…
Q: Considering the above risk-adjusted portfolio metrics (Sharpe ratio, Treynor ratio, Sortino ratio,…
A: Introduction:- When evaluating the performance of an active manager, it is important to understand…
Q: A stock whose return is more sensitive to changes in inflation, interest rates and GDP growth levels…
A: Beta is representation of systematic risk associated with a particular stock and systematic risk…
Q: Individuals in High tax brackets prefer high dividend payouts. True or false
A: Dividend payout is the proportion of dividends distributed to shareholders out of Net Income. The…
Q: A project has a beta of 0.91, the risk-free rate is 3.5%, and the market risk premium is 8.0%. The…
A: Expected rate of return: The expected rate of return represents the return anticipated by an…
Q: Selected financial information for CraneCorporation as of December are presented below. 2014…
A: Honor Code: Since you have posted a question with multiple sub-parts, we will provide the solution…
Q: Mama Lil’s Butt-Kicking Peppers are sold for the retail price of $12 per jar at Whole Foods, who…
A: Solution:- Selling expenses are the expenses incurred by a firm in its selling and distribution…
Q: The expected constant-growth rate of dividends is __96 for a stock currently priced at $66, that…
A: In the given case, the dividend just paid is given . It is taken as current paid dividend or last…
Q: At yield levels that are close to the bond's coupon rate, is the price of an option-free bond higher…
A: Since, the putable bond offers the investor the option to sell the bond back to the issuer at a…
Q: The covariance of stock Walter Inc. and Boo-boo Corp. is 0.50. The standard deviation of Walter is 1…
A: Stocks refer to the concept which is defined as the security that represents the ownership of the…
7
Step by step
Solved in 2 steps
- Consider information given in the table below and answers the question asked thereafter: State Probability return on stock A Return on stock B A 0.15 10% 9% B 0.15 6% 15% C 0.10 20% 10% D 0.18 5% -8% E 0.12 -10% 20% F 0.30 8% 5% i. Calculate expected return on each stock? On the basis of this measure, which stockyou will choose?ii. Calculate standard deviation of the returns on each stock? On the basis of thismeasure, which stock you will choose?iii. Calculate coefficient of variance of the returns on each stock? On the basis of thismeasure, which stock you will choose?1. If a stock has a(Alpha)=0.002, b(Beta)=1.4, Using the market model (eq. 7.4), find the expected percent return for the above stock if the market return is expected to be 2% and the risk free rate is 1%. 2. Assume stock prices follow a random walk and a particular stock has had the following recent stock prices: Day 1: 129.5 Day 2: 126.9 Day 3: 127.1 what is the best estimate of day 4 prices?Stock A's stock has a beta of 1.30, and its required return is 13.75%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.) Select the correct answer. a. 10.26% b. 10.32% c. 10.29% d. 10.35% e. 10.38%
- A stock has a beta of .86 and an expected return of 8.45 percent. If the risk-free rate is 2.2 percent, what is the stock's reward-to-risk ratio? Multiple Choice 6.71% 6.36% O 727% 8.55% 9.83%A stock has an expected return of 6.40%, the risk-free rate is 3% and the return on the market is 7.10%. What is this stock's beta? Multiple Choice 2.37 1.56 883832. a. You expect an RFR of 10 percent and the market return (RM) of 14 percent. Compute the expected return for the following stocks, and plot them on an SML graph. E(R₂) Stock DZA U N Beta 0.85 1.25 -0.20
- A stock has a beta of 1.78 The risk free rate is 1.314% and the market risk premium is 5% What is the fair return on the stock? Ia. A stock has a beta of 1.2, the expected return on the market is 17 percent, and the risk-free rate is 8 percent. What must the expected return on this stock be?Which one of the following stocks is correctly priced if the risk-free rate of return is 4.1 percent and the market risk premium is 8.6 percent? Stock Beta Expected Return A .81 7.88% B 1.57 12.69 C 1.38 11.35 D 1.37 11.99 E .95 12.27
- (a) Stock XYZ has an expected return of 12 %, and risk of β and = 1.0. Stock ABC is expected to return 13 % with a beta of 1.5. The markets expected return is 11 % and risk free rate is 5 %. Which stock is a better buy? What is the alpha of each stock? Plot the SML and the two stocks and show the alphas of each on the graph?Find the Beta for Stock Y given the Expected Return of Stock Y is 18.4% The expected return on the Market Portfolio is 28.4% and Risk-Free Rate is 4.5 %. Select one: O a. 0.60 O b. 0.90 O c None O d. 0.56 O e. 0.80b) Suppose that you observe the following information in Table 2 for stocks A and B: Table 2 Expected Return (%) 11% Stock Beta A 0.8 В 14% 1.5 The risk-free rate of return is 6% and the expected rate of return on the market index is 12%. Using the Single-Index Model, calculate the alpha of both stocks. Show your calculations. Explain what the alpha of the single-factor model represents and interpret your results.