Compute the expected rate of return on the first bank stock

Assignment Help Financial Management

Reference no: EM131522240

First Bank has 10,000,000 shares of common stock outstanding. The stock is traded in the over-the-counter market (there is a market for the stock through local brokerage firms, but is not traded on a stock exchange) where the present price is $34.50 per share. The present rate on Treasury bonds is 7.25 percent and the expected future return on stocks in general is approximately 12 percent. First Bank’s stock has a Beta of 0.6. Compute the expected rate of return on the First Bank stock, using the Capital Asset Pricing Model (CAPM) approach?

Reference no: EM131522240

Questions Cloud

Breathing in and out of a paper bag : "An old cure for dizziness is breathing in and out of a paper bag. How would this work?"

Which load affected the voltage divider the most and why : Which load affected the voltage divider the most (highest % difference)? Why? Is it the same load resistor for max power transfer for Vb and Vc?

How much additional tax will this taxpayer pay on additional : how much additional tax will this taxpayer pay on an additional $10,000 of taxable income?

Examine the procedures related to essential public health : Examine the existing procedures related to at least four (4) of the ten (10) essential public health services.

Compute the expected rate of return on the first bank stock : Compute the expected rate of return on the First Bank stock, using the Capital Asset Pricing Model (CAPM) approach?

Cardiovascular disease risk assessment : Please complete this assignment first. Copy the template below into a word document to ensure that you respond to all the questions.

What is firm expected dividend stream over next three years : What is the firm's expected dividend stream over the next 3 years? What is its current stock price?

Prepare the operating activities section of cash flows : Portions of the financial statements for Peach Computer are provided below.

What should mike as a christian do : According to the topic readings and lecture, how ought the Christian think about sickness and health? What should Mike as a Christian do?

User Account

All Pages