a. as the market grown by 1.5% in this month, the stock value also increases. As the Beta value is 2, means if the market increases by 1 point, the stock also increases by 2 points. In the given case the stock value is $100 million, with beta value of 2, and market increases by 1.5%, the stock value is going to be doubled, i.e. the company value is going to be $200.
b. as the expected win is $ 2 million, but they get only $1 million, it impacted the stock value in negative way.
22. The monthly rate of return on T-bills is 1%. The market went up this month...
3. You have $10,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 21.0% and a standard deviation of 40% and T-Bills (e.g., the risk free asset) with an expected return of 5% and a standard deviation of 0%. How much money will you invest in Stock X if your goal is to create a portfolio with an expected return of 26%? The amount of money in dollars) that I will invest in...
If the expected rate of return on the market portfolio is 13 percent and the T-bills yield is 6 percent, what must be the beta of a stock that investors expect to return 10 percent
2 If the expected rate of return on the market portfolio is 13% and T-bills yield 5%, what must be the beta of a stock that investors expect to return 10%? (Round your answer to 4 decimal places.) Beta of a stock
8. A company that wants to determine its cost of equity gathers the following information: Rate of return on 3-month Treasury bills 3.0% Rate of return on 10-year Treasury bonds 3.5% Market risk premium 6.0% The company's equity beta 1.5 Dividend growth rate 8.0% Corporate tax rate 35% Using the capital asset pricing model (CAPM) approach, the cost of equity (%) for the company is: - %
Question 10 (1 point) The rate of return on U.S. T-bills is 3.25% and the expected return on the market i 9.50%. J&X, Inc. has a beta (b) of 1.48. What is the required return (r) for J&X? a) 8.18% Ob) 12.50% Oc) 10.50% Od) 4.68% e) 13.18% Previous Page Next Page Page 10 of 26
Question 11 (1 point) The rate of return on U.S. T-bills is 3.25% and the expected return on the market is 9.50%. J&X, Inc. has a beta (b) of 1.48 Which of the following is most correct? a) J&X has more systematic, or market risk that the average firm. b) J&X has less total risk than the average firm. Oc) J&X has more total risk than the average firm. d) J&X has less non-diversifiable risk than the average firm.
The rate on Treasury bills is currently 75 percent, and the expected return for the market is 15 percent What (Capital asof pricing mode Levine Manufacturing Inc. is considering several investments in the popup window. should be the required rate of reborn for each investment using the CAPM? a. Using the CAPM the required rate of return for security Ais % (Round to two decimal places) не CAPMI)? i Data Table O SECURITY BETA 1.53 0.98 0.68 1.29 (Click on...
1. If average return in the stock market = 7.5% and average return on Treasury bills as a measure of risk free return = 1.5%, and beta of company Thor = 0.70. And consider the following data on the company Thor. SPS = Sales per share 5.70 EPS = Earnings per share 2.75 DPS = Dividends per share 1.25 (this is last year dividend or D0 ) BV = Book value per share 5.10 NPM = Net profit margin 7.2%...
Your estimate of the market risk premium is 66%. The risk-free rate of return is 22%, and General Motors has a beta of 1.5. According to the Capital Asset Pricing Model (CAPM), what is its expected return? A. 11% B. 10.5% C. 11.6% D. 9.9%
You have just run a regression of monthly returns on MAD, a newspaper and magazine publisher, against returns on the S&P 500, and arrived at the following result. Intercept: -0.005% ; Slope: 1.950; R2: 45. 0%. You now realize that MAD went through a major restructuring at the end of last month (which was the last month of your regression), and made the following changes. • The firm sold off its magazine division, which had an unlevered beta of 0.55,...