Capital asset pricing model-company risk premium

Assignment Help Financial Management
Reference no: EM131540735

Using the information from stock symbol CVS, answer the following questions using market value analysis:

Assuming a 5% historical risk free rate of return, and a 10% market return, answering the following?

What is the market expected risk premium?

Using Capital Asset Pricing Model (CAPM), what is the expect company’s risk premium?

How this expected return compares to the other ROE’s?

Reference no: EM131540735

Questions Cloud

Calculate the apr of a loan : Calculate the APR of a loan for $10,050, including loan fees of $320, at 11.5% for 3 years.
Is present value higher or lower than current stock price : Assuming an investment of 20 years, what is the present value of this stock? Is the present value higher or lower than the current stock price?
Net advantage or disadvantage of re-working keyboards : What is the net advantage or disadvantage of re-working the keyboards?
Explain why increasing certainty of cash flow : Explain why increasing certainty of cash flow would improve the value of business
Capital asset pricing model-company risk premium : What is the market expected risk premium? Using Capital Asset Pricing Model (CAPM), what is the expect company’s risk premium?
Calculate the gross proceeds per share : Howett Pockett, Inc., plans to Issue 10.1 million new shares of Its stock. Calculate the gross proceeds per share.
What amount of the payroll department costs : What amount of the payroll department costs wll be allocated to the molding department?
Considering new six-year expansion project : Summer Tyme. Inc.. is considering a new 6-year expansion project that requires an initial fixed asset investment of $3, 726 million.
Describe the tax advantages and disadvantages : Explain one relevant tax issue for Patty and describe the tax advantages and disadvantages of what she may be faced with.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the future value of this annuity

What is the future value (FV) of this annuity at the end of that 53 years given that the discount rate is 9%?

  Portfolio for the special circumstances

Mike decides that he is going to invest in just 2 stocks that he is comfortable owning, Apple and Google. Explain why he shouldn't expect to be rewarded, in the form of expected return on his "portfolio", for the special circumstances related to thes..

  How the breakeven point of firms with high fixed costs

Explain how the breakeven point of firms with high fixed costs relative to low variable cost differs from firms with relatively low fixed costs

  Regarding mortgage backed securities

Which of the following is not true regarding mortgage backed securities? securitization provides liquidy to the mortgage markets and makes it possible for banks to loan more money to home buyers .

  Liquid assets-which tend to have lower bankruptcy costs

Firms with more liquid assets, which tend to have lower bankruptcy costs, tend to use less debt. If changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.

  Nominal interest rate

Tom deposits $100 in a bank; nominal interest rate is 10%. How much interest rate will he earn after

  What is the present value of sharon kabanas lottery winning

Sharon Kabana won the state lottery and will receive a payment of $89,729.45 at the end of each year for the next 20 years. If the going rate of interest is 7.25 percent, what is the present value of her lottery winnings? What is the present value of..

  Uses payback period criteria of not accepting any project

AMP, Inc., has invested $2,165,800 on equipment. The firm uses payback period criteria of not accepting any project that takes more than four years to recover costs. The company anticipates cash flows of $433,386, $512,178, $562,255, $764,997, $816,5..

  Japanese yen forward premium relative to dollars

If the spot rate for the Japanese yen is $0.0092 per Japanese yen and the 3-month forward rate is $0.0093 per Japanese yen, what is the annualized premium (discount) for the 3-month forward quote on the Japanese Yen, i.e., the annualized Japanese Yen..

  What annual membership fees would make you indifferent

You are currently a member of a club whose annual membership fee is $2,000. The fee is expected to increase by 3 percent per year. a. Would you buy for $65,000 a lifelong family membership to the club that can be passed down to your descendants? You ..

  If a person stands at the end of the shadow and looks up

What is the angle of thperson's eyes to the top of the building (to the nearest hundredth of a degree)? (Assume the person's eyes are 4 feet above ground level.)  A) 80.72 B) 9.28 C) 80.84 D) 81.03

  Not-for-profit acute care facility

General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services:

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