Higher required return and lower standard deviation

Assignment Help Financial Management
Reference no: EM131506492

Company X has a higher required return than Company Y, but Company X has a lower standard deviation of returns than Company Y. Given this information, which of the following statements is CORRECT?

a. Company X has less market risk than Company Y.

b. Company X has more company-specific risk than Company Y.

c. Company X has a higher correlation with the market than Company Y.

d. Company X’s stock is a better buy than Company Y’s stock.

Reference no: EM131506492

Questions Cloud

What is the portfolio weight of each stock : What is the portfolio weight of each stock? What is the expected return of your portfolio? What is the portfolio weight of each stock?
Calculate the mirr of project using reinvestment approach : Calculate the MIRR of the project using the discounting approach. Calculate the MIRR of the project using the reinvestment approach.
Used by new car dealers to finance their inventories : Which type of financing is generally used by new car dealers to finance their inventories?
Write a summary on the mechanics-protective collar : Write a summary on the mechanics of the following options strategies-Protective Collar-Long Straddle
Higher required return and lower standard deviation : Company X has a higher required return than Company Y, but Company X has a lower standard deviation of returns than Company Y.
What two duties owed to the beneficiaries : Scott has violated what two duties owed to the beneficiaries. The duty to show impartiality among the beneficiaries.
Establishing a trust arrangement : Which one of the following is NOT a reason for, or an advantage of, establishing a trust arrangement?
Quantitative problem-change in inflation : Assume now that there is no change in inflation, but risk aversion increases by 1%. What is WCE's required rate of return now?
Forecast for sales using regression to estimate trend : What would be the forecast for next year’s sales using regression to estimate a trend?

Reviews

Write a Review

Financial Management Questions & Answers

  Excess of the number of free transactions

Pelican Point Financial Group’s clientele consists of two types of investors. The first type of investor makes many transactions in a given year and has a net worth of over $1.5 million. These investors seek unlimited access to investment consultants..

  Considering purchase of two practically identical properties

You are considering a purchase of two practically identical properties. Both properties have and are expected to generate the same net income. Property (1) has a cap rate of 9 while property (2) has a cap rate of 7. It is reasonable to assume that on..

  What was the operating cash flow

Last year, Webster Farms had annual revenue of $87,200, depreciation of $11,600, cost of goods sold of $54,700, and administrative expenses of $8,300. The firm paid $3,200 in dividends and paid taxes of $4,300. What was the operating cash flow?

  Calculate eco s current cost of preferred stock

Calculate Eco s current after-tax cost of long-term debt, calculate Eco s current cost of preferred stock

  Geometric average return for the period

A stock has annual returns of 5.4 percent, 12.9 percent, -3.8 percent, and 9.4 percent for the past four years. The arithmetic average of these returns is _____ percent while the geometric average return for the period is _____ percent.

  Amount will the insurance company pay for the damages

What amount will the insurance company pay for the damages? What amount will Kurt have to pay?

  Find the probability that all three tickets have no value

A radio station runs a promotion at an auto show with a money box with 15 $100 tickets, 10 $50 tickets, and 12 $25 tickets. The box contains an additional 20 "dummy" tickets with no value. Three tickets are randomly drawn. Find the probability that a..

  Annual dividend on common stock

The last annual dividend on KCBT Corporation's common stock, paid yesterday, was $0.50. If you require a rate of return of 10 percent, If you expect the dividends on KCBT to grow at a constant rate of 9 percent, what is the highest price you should b..

  Find the beta of each stock

Consider the following two scenarios for the economy and the returns in each scenario for the market portfolio, an aggressive stock A, and a defensive stock D. Rate of Return Scenario Market Aggressive Stock A Defensive Stock D Bust −8% −10% −6% Boom..

  Original cost of certain asset-what is the capitalized worth

The original cost of a certain asset is $1,180. It has to be replaced (at this cost) every 4 years. What is the capitalized worth?

  Theory of absolute advantage-what are the pro-cons of each

Explain theories: Mercantilism, Theory of Absolute Advantage, and Theory of Comparative Advantage- please compare and contrast. What is your understanding of each theory? What are the pro and cons of each? Do these theories help answer the question o..

  What is the cost of equity-what is the cost of debt

Fyre Inc has a D/E ratio of 0.85. Its WACC is 9.9%, and the tax rate is 35%. a. If the company’s cost of equity is 14%, what is the cost of debt? b. If instead you know that the cost of debt is 10.5%, what is the cost of equity?

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