Determine the beta of the firm

Reference no: EM1373166

An investor has $5,000 invested in a stock which has an estimated beta of 1.2, and another $15,000 invested in stock of the firm for which he works. The risk free rate is 6% and the market risk premium is also 6%. The investor calculates that the required rate of return on his total ($20,000) portfolio is 15%. Determine the beta of the firm for which he works?

Reference no: EM1373166

Questions Cloud

Determine the expected return on stock : Assume the expected return on the market portfolio is 14.7% and the risk free rate is 4.9%. Morrow Inc. stock has a beta of 1.3 Suppose the capital asset pricing model holds.

Assimilate all of the marketing readings into a cogent guide : Assimilate all of the readings throughout the semester into a cogent guide for thinking about Marketing and review your readings throughout the course and make a list of the key concepts

Question related to risk : Suppose you have a friend who is always getting into trouble by taking unwise risks. What advice, based on what you have learned in this course, would you give this person?

Calculating annual cash flow : An investment costs $3,000 at present and provides cash flows at the end of each year for 20 years. The investment's expected return is 10%.

Determine the beta of the firm : An investor has $5,000 invested in a stock which has an estimated beta of 1.2, and another $15,000 invested in stock of the firm for which he works. The risk free rate is 6% and the market risk premium is also 6%.

Computation to find future value of stock : Stock currently sells for 35.02 per share, market required rate of return is 17 percent, the beta is 0.10, ant risk free rate of return is 3.3 percent.

Capital budgeting decisions and utility rate decisions : If the expected returns for risk free asset and a risky asset are 4 percent and 17 percent respectively, what percentages of your money must be invested in risky asset and risk free asset, respectivel.

Design of the software : Report of the software design and implement the software as per the design, and demonstrate it

Multiple choice question on wacc : Brandon Corporation consists of two divisions of same size, and Brandon is 100% equity financed. Division A cost of equity capital is 9.8%, while Division B cost of equity capital is 14%.

User Account

All Pages