Reference no: EM131063128
Investment in portfolio A has a standard deviation of 9%, while investment in portfolio B has a standard deviation of 14%. In order to tolerate the increased risk, what would you as an investor expect?
a. A higher expected return for portfolio A.
b. A higher expected return for portfolio B.
c. An equal return for either portfolio A or portfolio B.
d. Avoidance of portfolio B.
The required rate of return for an investment can be calculated from the capital asset pricing model as follows:
a. Use only the return on 3-month Treasury bills to determine the required return.
b. Use the beta of the investment to determine the required return.
c. Use the risk-free rate, plus the investment’s beta times a premium for systematic risk.
d. Use the risk-free rate, plus the investment’s beta times a premium for diversifiable risk.
|
Financial ratios and common-size financial statements
: State why Walmart is a competitor of Target. Identify the reason that financial ratios and common-size financial statements are more important when contrasting the financial performance of Target to Walmart than the financial amounts reported on the ..
|
|
Calculate your payment and effective annual rate
: Suppose Mary Jane wishes to take our a 30-year interest-only mortgage loan of $200,000 with an interest rate of 8%. How much will Mary Jane pay the lender EACH MONTH? You are considering a 5%, 15-year mortgage with zero points. Noting that mortgage p..
|
|
Required return that brigham common stock should provide
: Brigham Jewellery Corporatio9n common stock has a beta, B, of 1.8. The risk free rate is 5%, and the market return is 16%. Determine the risk premium on Brigham common stock should provide. Determine the required return that Brigham common stock shou..
|
|
Family limited partnership is one option in estate planning
: A family limited partnership is one option in estate planning that is effective in certain situations. In this discussion, you explore situations appropriate for this option and consider the pros and cons.
|
|
Calculated from the capital asset pricing model
: Investment in portfolio A has a standard deviation of 9%, while investment in portfolio B has a standard deviation of 14%. In order to tolerate the increased risk, what would you as an investor expect? The required rate of return for an investment ca..
|
|
Prior to consideration of working capital
: A potential project with is expected to generate the following revenue per annum for the next 6 years with a after-tax operating cash flow margin of 20% (prior to consideration of working capital) from new business with a government agency. Now consi..
|
|
What are the NPV and IRR of the project
: Butler International Limited is evaluating a project in Erewhon. The project will create the following cash flows: Year Cash Flow 0 –$ 950,000 1 285,000 2 345,000 3 415,000 4 255,000 All cash flows will occur in Erewhon and are expressed in dollars. ..
|
|
About the present value of an annuity
: Carrie and Miranda earn the same salary. However, Miranda has been far more financially responsible. She pays her bills on time and pays off her credit card debt quickly. Carrie had been less financially responsible. She often buys too many shoes and..
|
|
Calculate the firm new long-term debt added during year
: During the year, Belyk Paving Co. had sales of $2,398,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,427,000, $435,200, and $490,200, respectively. Calculate the firm's new long-term debt added during t..
|