Problem 18-13 WACC First and Ten Corporation's stock returns have a covariance with the market portfolio...
First and Ten Corporation’s stock returns have a covariance with the market portfolio of .0516. The standard deviation of the returns on the market portfolio is 21 percent and the expected market risk premium is 6.3 percent. The company has bonds outstanding with a total market value of $57 million and a yield to maturity of 6.6 percent. The company also has 6.2 million shares of common stock outstanding, each selling for $31. The company’s CEO considers the firm’s current...
First and Ten Corporation’s stock returns have a covariance with the market portfolio of .0516. The standard deviation of the returns on the market portfolio is 21 percent and the expected market risk premium is 6.3 percent. The company has bonds outstanding with a total market value of $57 million and a yield to maturity of 6.6 percent. The company also has 6.2 million shares of common stock outstanding, each selling for $31. The company’s CEO considers the firm’s current...
First and Ten Corporation's stock returns have a covariance with the market portfolio of 0461. The standard deviation of the returns on the market portfolio is 20 percent and the expected market risk premium is 7.2 percent. The company has bonds outstanding with a total market value of $55.9 million and a yield to maturity of 6.1 percent. The company also has 5.1 million shares of common stock outstanding, each selling for $42 The company's CEO considers the firm's current...
First and Ten Corporation’s stock returns have a covariance with the market portfolio of .0421. The standard deviation of the returns on the market portfolio is 18 percent and the expected market risk premium is 6.4 percent. The company has bonds outstanding with a total market value of $55.1 million and a yield to maturity of 5.3 percent. The company also has 4.3 million shares of common stock outstanding, each selling for $50. The company’s CEO considers the firm’s current...
First and Ten Corporation’s stock returns have a covariance with the market portfolio of .0501. The standard deviation of the returns on the market portfolio is 22 percent and the expected market risk premium is 6.6 percent. The company has bonds outstanding with a total market value of $56.7 million and a yield to maturity of 6.9 percent. The company also has 5.9 million shares of common stock outstanding, each selling for $34. The company’s CEO considers the firm’s current...
First and Ten Corporation’s stock returns have a covariance with the market portfolio of .0486. The standard deviation of the returns on the market portfolio is 21 percent and the expected market risk premium is 6.7 percent. The company has bonds outstanding with a total market value of $55.4 million and a yield to maturity of 5.6 percent. The company also has 4.6 million shares of common stock outstanding, each selling for $47. The company’s CEO considers the firm’s current...
HAPPY stock returns have a covariance with the market portfolio of 0.036. The standard deviation of the returns on the market portfolio is 20%, and the expected market risk premium is 7.5%. The company has bonds outstanding total market value of $35 million. The bond is 10% annual coupon with one-year maturity and sold each at 101.852% of the face value of $1000. The company also has 6 million shares of common stock outstanding, each selling for $20. The corporate...
Problem 18-14 Beta and Leverage Fitzgerald Industries has a new project available that requires an initial investment of $5.2 million. The project will provide unlevered cash flows of $848,000 per year for the next 20 years. The company will finance the project with a debt-value ratio of .25. The company's bonds have a YTM of 6.9 percent. The companies with operations comparable to this project have unlevered betas of 1.11, 1.04, 1.26, and 1.21. The risk-free rate is 4.3 percent...
You have prepared the following scenario analysis for the returns of the market index portfolio, M, and a stock. Assume that each scenario is equally likely. 1. Rate of return Scenario Bust Boom Market 10% 30% Stock 14% 26% a. Find the variance of the market and the stock, and beta of the stock. b. What is the expected rate of return on the stock and the market index? If the T-bill rate is 6 percent, what does the CAPM...
You have prepared the following scenario analysis for the returns of the market index portfolio, M, and a stock. Assume that each scenario is equally likely. 1. Rate of return Scenario Bust Boom Market 10% 30% Stock 14% 26% a. Find the variance of the market and the stock, and beta of the stock. b. What is the expected rate of return on the stock and the market index? If the T-bill rate is 6 percent, what does the CAPM...