How does the beta coefficient influence firms stock value

Assignment Help Financial Econometrics
Reference no: EM13328036

Olter, Inc. is starting its risk management program for the company and has asked for your help in determining critical risk measurements for the firm. The company has identified several factors in the market that they believe are critical for your tasks:

The risk-free rate is 6%
The required return on the average stock is 13%
Olter's average return is 13%
Required:

What is Olter's beta coefficient?

How does the beta coefficient influence the firm's stock value?

What is the required rate of return for Olter?

In terms of risk, how does Olter compare to the average firm in the market?

If Olter's beta increased to 1.6, what would you expect to happen to the required rate of return and what does this mean for the firm?

Reference no: EM13328036

Questions Cloud

Determine the diameter of the ball bearing : a small ball bearing is illuminated with blue light from an argon ion laser (4880 A.) What is the diameter of the ball bearing
A strontium nitrate and calcium carbonate are soluble salts : strontium nitrate and calcium carbonate are soluble salts B. barium fluoride and lithium chloride are soluble salts C. barium nitrate and sodium phosphate are soluble salts
The child and family professions : Does society have a right to legally define who can and cannot get married in the United States (this is a general question, NOT one focusing primarily on same-sex marriage) and what impact will your position have on those working in the child..
Find the magnitude of the lift force acting on the plane : A jet airplane is in level flight. The mass of the airplane is m = 8990 kg. What is the magnitude of the lift force acting on the plane
How does the beta coefficient influence firms stock value : Olter, Inc. is starting its risk management program for the company and has asked for your help in determining critical risk measurements for the firm. The company has identified several factors in the market
Professional associations review and report : PROFESSIONAL ASSOCIATIONS REVIEW AND REPORT
Explain a fragment of the tank indicates that the gas : The mass of the dry gas is 872 mg. A fragment of the tank indicates that the gas is a monoatomic element. Write out the full name of the gas.
Describe a cylinder of compressed gas rolls off a boat : A cylinder of compressed gas rolls off a boat and falls to the bottom of a lake. Eventually it rusts and the gas bubbles to the surface. A chemist collects a sample of the gas with the idea of trying to identify the gas.
How much energy is stored in the compressed spring : A 5-lbm toy car is at the end of a spring compressed 2 inches. The linear spring has a force constant of k = 3 lbf/in. How much energy is stored in the compressed spring

Reviews

Write a Review

Financial Econometrics Questions & Answers

  Find what is the simple interest rate for the account

Starting with $2,000 on March 3, you deposit $500 23 days from March 3, withdraw $800 69 days from March 3, and deposit $600 121 days from March 3. If your final balance is $2,458 150 days from March 3

  Determine what is net income-roa and roe

Here and Gone, Inc., has sales of $19.9 million, total assets of $14.9 million, and total debt of $5.7 million. Assume the profit margin is 12 percent.

  How do you create or decrease leverage

What is leverage, how do you create or decrease leverage and why is leverage used?

  Determine the national income using the is-lm analysis

results regarding the equilibrium interest rate and national income using the IS-LM analysis for each of the following: a. Congress decides to pass an election year tax cut.

  How long should owner wait to save the entire amount

A restaurant owner wants to buy new kitchen equipment for $25,000. He would like to pay for it through saving up $2,000 a week in a fund that pays 10% interest compounded monthly.

  Determine what is capitals after-tax wacc

If the returns required by investors are 10 percent, 13 percent, and 15 percent for the debt, preferred stock, and common stock, respectively, what is Capital's after-tax WACC. Assume that the firm's marginal tax rate is 40 percent.

  Calculate tbar-t of equated time approximates by tbar

A payment of $10 at time 1 and a payment of $20 at time 4 is equivalent to a payment of $30 at time t assuming a constant force of interest delta = .05.

  Determine the effect on net income and earnings per share

Determine the effect on net income and earnings per share for issuing stock and issuing bonds. Assume the new shares or new bonds will be outstanding for the entire year.

  What will the new stock price be if project is undertaken

Gross revenue last year were $9.9 million, and total costs were $5.0 million. Blaine Company has 1.6 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 6 percent per year.

  Determine by how much must reserves be decreased

The Federal Reserve has decided that interest rates need to be increased to maintain low inflation in the economy. To accomplish this goal, the Fed has determined that the money supply needs to be decreased by $188 billion.

  Determine what annual interest rate is the firm paying

Your company borrows $55,000 today to funds its growth initiatives. It must repay the bank in 4 annual payments of $17,100 at the end of each year. What annual interest rate is your firm paying

  Determine what is the profit margin of total asset turnover

The Cocona Co. has total equity of $639,400 and net income of $51,700. The debt-equity ratio is .55 and the total asset turnover is 1.5. What is the profit margin

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