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1. The risk-free rate is 6% and the expected rate of return on the market portfolio is 11%. a. Calculate the required rate of return on a security with a beta of 1.75. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
2. A share of stock with a beta of 0.81 now sells for $56. Investors expect the stock to pay a year-end dividend of $4. The T-bill rate is 4%, and the market risk premium is 7%. If the stock is perceived to be fairly priced today, what must be investors’ expectation of the price of the stock at the end of the year? (Do not round intermediate calculations. Round your answer to 3 decimal places.)
3. The risk-free rate is 6% and the expected rate of return on the market portfolio is 11%.
a. Calculate the required rate of return on a security with a beta of 1.75. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Suppose that you are interested in buying the stock of a company that has a policy of paying a $5 per share dividend every year. Assuming no changes in the firm’s policies, what is the value of a share of stock if the required rate of return is 10 pe..
The firm finances with only debt and common equity, so it has no preferred stock. What are the firm’s ROE and ROIC?
Calculate the NPV of this investment opportunity, assuming all cash flows occur at the end of each year. Should the company make the investment?
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Assume that the City of Tampa sold an issue of $1,000 maturity value, tax exempt (muni), zero coupon bonds 5 years ago. The bonds had a 25-year maturity when they were issued, and the interest rate built into the issue was a nominal 10 percent, but w..
Roberts Manufacturing has never offered cash discounts to its customers before, but is considering it now. It currently sells on terms of net 50, and its days sales outstanding is 50 days. What is Robert's new days sales outstanding (DSO)?
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As a jewelry store manager, you want to offer credit, with interest on outstanding balances paid monthly.
If the risk-free rate is 9.2 percent and the market risk premium is 6 percent, at what price would you expect TCK’s common stock to sell?
What is the value of the put with the same strike and expiration?
A portfolio manager in charge of a portfolio worth $10 million is concerned that the market might decline rapidly during the next six months and would like to use options on the S&P 100 to provide protection against the portfolio falling below$9.5 mi..
A baseball player is offered a 5-year contract which pays him the following amounts at the end of each year:
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