Other metrics relative to standard benchmark

Assignment Help Financial Management

Reference no: EM13941144

Most sources report alphas and other metrics relative to a standard benchmark, such as the S&P 500. When might this method be an inappropriate comparison?

Reference no: EM13941144

Questions Cloud

Annually in maintenance expense : Your old car costs $3000 annually in maintenance expense. You could replace it with a newer vehicle costing $6000. Both vehicles would be expected to last 4 more years. If your opportunity cost is 10% what should be the maximum annual maintenance exp..

Should the major decisions on resource depletion : Should the major decisions on resource depletion (especially energy policy) be made: By government experts? By scientific experts? By everyone? Provide and develop moral arguments in support of your judgment.

Estimate the approximate yield to maturity : Estimate the approximate yield to maturity of company debt and the after-tax cost of debt (look at Morningstar.com for the YTM). Determine the approximate cost (required rate of return) of equity using the Capital Asset Pricing Model.

What is you expected rate of return on this stock : You recently purchased a stock the is expected to earn 30 percent in a booming economy, 9 percent in a normal economy, and lose 33 percent in a recessionary economy. There is a 5 percent probability of a boom and a 75 percent chance of a normal econo..

Other metrics relative to standard benchmark : Most sources report alphas and other metrics relative to a standard benchmark, such as the S&P 500. When might this method be an inappropriate comparison?

Ignore depreciation and capital gains-is worthwhile projet : Judy Garland is planning to open a stall at the local mall, paying $2500 rent, in advance each month. She will buy $25,000 in costume jewelry as the initial inventory, and buy the display cases for $4000. Assume that all the cash flows occur at the e..

Possibility of buying several coin-operated vending machines : Leila Liverpool is looking into the possibility of buying several coin-operated vending machines and placing them in the local hospitals. Each machine costs $3200, which she will depreciate on a straight-line basis over 10 years. Assume that the inco..

Find the price of apartment that royal birkdale should pay : Royal Birkdale Company is interested in buying an apartment and renting it out for $12,000 a year, collecting the rent in advance each year. Royal Birkdale will depreciate the apartment over 20 years, but sell it after 5 years at a price, which is 20..

All expenses are fully deductible and all gains are taxable : Kathy St Andrews is planning to buy a house for $140,000 by borrowing money at the rate of 9%. She expects to rent the house for 6 years, collecting $11,000 annual rent in advance each year. She thinks that she can sell the house for $180,000 after 6..

User Account

All Pages