Expected rate of return on the market

Assignment Help Business Economics
Reference no: EM133126601

Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%. I am buying a firm with an expected perpetual cash flow of $1,000 but am unsure of its risk. If I think the beta of the firm is .5, when in fact the beta is really 1, how much more (in dollars) will I offer for the firm than it is truly worth? Round to the nearest ten dollars.

Reference no: EM133126601

Questions Cloud

Forecast the position of the is curve : If you follow a strategy where you set r for the month (not M a ), money demand shocks have no effect on output, because there is effectively no LM curve - the
Explain the maintenance warranty for 2 years : You own an old "water skiing" motor boat that is a real gas guzzler. it is 10-years old and can be sold now for $3,000 cash. Assume its market value (MU) in 2 y
Trade off between economic efficiency and equality : Discuss why there is a trade off between economic efficiency and equality?
Explain the management decision : Teamwork Assignment Question: Based on the Teamwork material, what is the best advice you could give to someone who is a novice when it comes to working on team
Expected rate of return on the market : Assume that the risk-free rate of interest is 6% and the expected rate of return on the market is 16%. I am buying a firm with an expected perpetual cash flow o
Australian trade and investment commission : "The Australian Trade and Investment Commission contributes to Australia's economic prosperity by helping Australian businesses, education institutions, touris
Find and interpret the p-value for test : In a test of the hypothesis H0: =10 versus Ha: ?10, a sample of n = 50 = 11.7 and standard deviation s = 4.1. Find and interpret the p-value for this test.
Find the number of hours : Donald Tramp, CEO of Golden Palace Casino, the leading online casino is interested in allocating resources to satisfy the demand of their players and maximize p
Explain genomics methods that have been used in the study : Explain the genomics methods that have been used in the study. You should give more explanation than is provided in the paper so that a scientist

Reviews

Write a Review

Business Economics Questions & Answers

  What are the various stages of the product cycle

What are the various stages of the product cycle? What does the product cycle model tell us about international trade and technology?

  Output fell and the price level rose

A country reported nominal GDP of $115 billion in 2010 and $125 billion in 2009. It also reported a GDP deflator of 85 in 2010 and 100 in 2009.

  Perfectly competive market

Suppose Janet sells papayas at a perfectly competive market in Tailand. While her average total caost reaches a minimum level of 43 her minimum average variable cost is $2. At what price will Janet reach the equilibrium level Will she sell any papaya..

  Determine the breakeven value of the discount rate

Use several alternative discount rate values (1% to 10%) to investigate the sensitivity of the present value of net benefits of the dam in exercise (1) to the assumed value of the real discount rate. Determine the "breakeven" value of the discount ra..

  Republican effort to push shutdown

Use the video Endgame Unclear in Republican Effort to Push Shutdown you examined in Unit 2

  Illustrate what does cost-of-carry of futures

Illustrate what is repayment amount if you make a cash loan. Illustrate what does cost-of-carry of futures or forward pricing mean? Explain how is it related to storage cost of gold.

  Discuss the challenges of communicating a products value

Discuss the challenges of communicating a product's value and ways those challenges may be addressed. Provide specific examples to support your response.

  What are some obstacles your firm might face

What are some obstacles your firm might face with production in another country - What impact would that have on your firm?

  If hospitals begin to affiliate within regions

If hospitals begin to affiliate within regions, would you expect that “unnecessary duplication of facilities” would increase, decrease or stay the same? Why is that? As you think about your answer, consider why this duplication exists in the first pl..

  Stable prices than employed in a time of rising prices

If public opinion surveys show that the majority of Americans regard inflation as a more serious threat than unemployment: Does this imply that the majority of Americans would rather be unemployed in a period of stable prices than employed in a time ..

  Enforcement of antitrust laws

If the government, and through the enforcement of antitrust laws, believes the presence of competition in the marketplace achieves the highest level

  What was the present worth of savings associated with

what was the present worth of savings associated with the cheaper chip over a 2-year period at an interest rate of 24% per year, compounded monthly?

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