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What expected rate of return would a security earn if it had a 0.5 correlation with the market portfolio and a standard deviation of 2 percent?
Describe why these two methodologies (CAPM and WACC) may produce different results.
If the risk-free rate decrease to 3.5 percent, what is the expected return on stock?
Recalculate IBM's stock using the P/E ratio model (pp. 350-1) and the needed info found in the IBM pdf file
How does the correlation between the returns on A and B affect the standard deviation of the portfolio?
This year nothing changed except market risk premium increased 2%. What is portfolios current required rate of return?
Alpha Company. has just issued a traditional 3 year 6% coupon bond that makes coupon payments twice a year at a price of 97. What is yield to maturity on bond?
If the risk free rate decreases to 3.5%, what is the expected return on Solomon's stock?
Find an estimate of the risk-free rate of interest, krf. To obtain this value, go to Bloomberg:
If Do = $3.75, Po = $40, and g = 6%, using the DCF method, what is the cost of common equity?
Based on the capital-asset-pricing model, what is the expected return on the above portfolio?
A stock has an expected return of 12.5%, the risk-free rate is 5%, and the market risk premium is 6%. What must the beta of this stock be?
Assume the capital-asset-pricing model holds. What is the expected return on Solomon's stock?
If a portfolio of the two assets has a beta of 0.75, the weight of the stock is _________% and the weight of the risk-free is _________%
The expected return on a portfolio that is equally invested in the two assets is ________ percent.
Calculate the standard deviation of a portfolio that is composed of 35 percent A and 65 percent B
What expected rate of return would a security earn if it had a 0.6 correlation with the market portfolio and a standard deviation of 3 percent?
If the risk-free rate decreases to 3.7 percent, what is the expected return on Morrow's stock?
You are a consultant to a firm evaluating an expansion of its current business. The cash flow forecasts (in millions of dollars) for the project are:
The ABC Company has two project proposals currently under consideration and would like your help in selecting one of the two projects.
Stock A has a beta of .5 and investors expect it to return 5 percent. Stock B has a beta of 1.5 and investors expect it to return 13 percent.
Is there any additional information missing from the problem that would enhance the decision-making process?