According to the capital asset pricing model

Assignment Help Finance Basics
Reference no: EM132000489

Your personal opinion is that security XYZ has an expected rate of return of 10%. It has a beta of 1.5. The risk-free rate is 1.5% and the market expected rate of return is 7.5%. According to the Capital Asset Pricing Model, this security is underpriced of overpriced?

Reference no: EM132000489

Questions Cloud

What bid price should you submit on the contract : If your tax rate is 34 percent and your required return on this project is 12 percent, what bid price should you submit on the contract?
Strategy and the future operational plans of entity : A convincing business plan will detail the strategy and the future operational plans of an entity.
Generate exactly the same cash flows-using homemade leverage : Show how Richard could generate exactly the same cash flows and rate of return by investing in ABC and using homemade leverage.
What is the return that firm x earns on the lease : After five years, firm X expects to sell the asset for $10,000. What is the return that firm X earns on the lease?
According to the capital asset pricing model : The risk-free rate is 1.5% and the market expected rate of return is 7.5%. According to the Capital Asset Pricing Model, this security is underpriced
What is shadow cost of equity : What is Shadow’s cost of equity? What is Shadow’s WACC after it converts to the 25% debt-to-equity ratio?
Make any necessary entries for mason company : On January 1st, 2012, Aladdin Company purchased $1,000,000 of 8%, 5 year, Make any necessary entries for Mason Company
How much will you have saved : How much will you have saved after 6 years by contributing $1,200 at the end of each year if you expect to earn 11% on the investment?
How do fees or discounts affect the interest rate : Define rate of return analysis and list one advantage of rate of return analysis. How do fees or discounts affect the interest rate?

Reviews

Write a Review

Finance Basics Questions & Answers

  A- long-term credit rating

Consolidated Edison Inc. (Ticker: ED) has an A- long-term credit rating from Standard & Poor's, and a 50% net debt to capitalization ratio.  ED is a regulated electric utility serving the New York metropolitan area.  Newmont Mining Corp.

  The financial statements of campbell soup company

a. As of July 28, Year 11, Campbell owned 33% of Arnotts Limited. Explain where Campbell reports the amounts representing this investment.

  What you would put into thing like investment and retirement

Next, consider the future, look at how you can make the money work for you. Consider what you would put into things like investments, retirement, property, etc.

  How much interest was earned

Find the future value of an ordinary annuity of $8000 paid semiannually for six years at 6% annual interest compounded semiannually. How much was invested? How much interest was earned?

  How much total interest will you pay

You borrow $200,000 to buy a house. The mortgage rate is 7.5% and the loan period is 30 years. Payments are made monthly.

  What drives growth in residual operating income

Explain what is meant by a financing risk premium in the equity cost of capital. When will a financing risk premium be negative?

  Find current share price

Apocalyptica Corporation pays a constant $7.25 dividend on its stock. The firm will maintain this dividend for the next nine years and will then cease paying dividends forever.

  What is the net present value of the project

The net aftertax salvage value is estimated at $11,000 and will be received during the last year of the project's life. What is the net present value of the project if the required rate of return is 12 percent?

  Does rpm actually create a shortest path tree

Which phase is responsible for creating a broadcast tree with the router as the root? Which phase is responsible for changing the broadcast tree to a multicast tree?

  Types of staffing policies used by international companies

In 500 words; differentiate between the three types of staffing policies used by international companies. What are the advantages of each?

  Required rate of return on the new portfolio

The risk-free rate is 4.20%. You now receive another $5 million, which you invest in stocks with an average beta of 0.65. What is the required rate of return on the new portfolio?

  Acquisition decisions at kellogg

Kellogg Co. agreed to acquire Keebler Foods Co. for $3.86 billion, or $42 per share. What were Kellogg's objectives in the acquisition?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd