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Company Beta
A. Nike (NKE) 0.41
B. VMWare (VMW) 0.78
Nike required rate of return is 5.65%
VMWare required rate of return is 8.69%
Find on the Internet the 52-weeks change of the stock price. Compare the required return on these stocks calculated using CAPM against their historical return over the last 52 weeks. Is there a difference between these returns? Are these stock overvalued, undervalued, or properly valued? Why? In accordance with your founding, is it reasonable for the investor to buy any of these stocks? Explain your answers.
A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 7.5%. Assume that the liquidity premium on the corporate bond is 0.7%. What is the default risk premium on the corporate bond?
What is the estimated cost of common equity to the firm using the dividend growth? model?
A beneficiary receives a $10,000 life insurance benefit. If the beneficiary uses the proceeds to buy a 10-year annuity-immediate,
Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price.
Bartunek Co. is a U.S.-based MNC that has European subsidiaries and wants to hedge its translation exposure to fluctuations in the euro’s value. Explain some limitations when it hedges translation exposure.
Food Products, Inc. has cash of $2 million, short-term investments of $3 million, accounts receivable of $4 million, inventory of $5 million and plant, property, and equipment of $ $6 million. It’s current liabilities = $10 million and it’s total lia..
What is the net rate of return from this investment?
Which of the following statements can be supported based on an analysis of the relationship between various indices of stock prices,
Based on the data above, what will be the resulting percentage change in earnings per share if they expect units produced and sold to change -2.4 percent?
If Excel Inc. has projected sales of $40,000 in January, $30,000 in February, and $20,000 in March; 20% of sales are in cash and 80% of sales are on credit ( whitch are collected in the month following the sale); What are the cash receipts for Februa..
The NEWT Company is located in a country where there are no taxes and there are perfect capital markets so that there are no bankruptcy costs. The corporation currently has $25 million in debt outstanding and the value of its equity is $75 million. W..
Farley Inc. has perpetual preferred stock outstanding that sells for $30 a share and pays dividend of $2.75 at the end of each year. What is the required rate of return? If Treasury bills are currently paying 6 percent and the inflation rate is 2.3 p..
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