Stock under-priced-overpriced or priced in equilibrium

Assignment Help Financial Management
Reference no: EM131603493

Stock A has a required rate of return of .12 and a beta of 0.7. The risk-free rate is .05. Stock B has an expected rate of return of .09 and a beta of .5. Is Stock B under-priced, overpriced, or priced in equilibrium?

Reference no: EM131603493

Questions Cloud

Stock price fall before you would get margin call : You have just purchased 100 shares of Ford Motor at $50 per share on margin. how far could the stock price fall before you would get a margin call?
Risk includes both firm-specific and market risks : CAPM posits that the relevant risk is total risk, because this risk includes both firm-specific and market risks
Compute the weighted average cost of capital : Compute the weighted average cost of capital. Which project(s) should be accepted? Piece of equipment
Appropriate for evaluating only the diversified portfolios : The Sharpe measure is based on the concept of total risk, so it is appropriate for evaluating only the diversified portfolios
Stock under-priced-overpriced or priced in equilibrium : Stock A has a required rate of return of .12 and a beta of 0.7. Is Stock B under-priced, overpriced, or priced in equilibrium?
What should your conclusion be on the stock performance : What should your conclusion be on the stock’s performance based on Jensen measure?
What can you assume the yield on the debt is : Royal Jewelers Inc. has an aftertax cost of debt of 5.75 percent. With a tax rate of 40 percent, what can you assume the yield on the debt is?
The stock performance based on treynor measure : You are assigned to evaluate the performance of the NNB stock. What should your conclusion be on the stock’s performance based on Treynor measure?
What asset level will firm need to issue additional stock : A firm has $50 million in assets and its optimal capital structure is 60% equity. what asset level will the firm need to issue additional stock?

Reviews

Write a Review

Financial Management Questions & Answers

  The firm manufactures a global positioning system gps that

the firm manufactures a global positioning system gps that sells for 2000 with cost of goods sold hardware 30 and

  Using the straight line method to salvage value

Capital Foods purchased an oven 5 years ago for $45,000. The oven is being depreciated over its estimated 10 year life using the straight line method to a salvage value of $5,000. Capital is planning to replace the oven with a more automated one that..

  Based on the total available orchestra front seating

Enter a 3-D formula in cell C3 on the October worksheet that calculates the overall percentage of total Sunday Orchestra Frot tickets sold based on the total available Orchestra Front seating. Format the result with Percent Style. The result is 100%,..

  Discuss the major capital budgeting methods

Discuss the major capital budgeting methods used by corporations to evaluate projects. Why do many corporations continue to use the payback period method? Which method do you prefer: Explain why you prefer this method?

  The firm is expected to increase its dividend

The current dividend for Woods Corp. is $4 per share. The firm is expected to increase its dividend by 15% during the next year and then decrease the growth rate of dividend payouts to a constant 10% per year thereafter. If the required return on the..

  What is the effective annual rate

Find the following values for a lump sum assuming annual compounding: What is the effective annual rate (EAR) if the stated rate is 8 percent and compounding occurs semiannually? Quarterly?

  If the stock price falls while the call price rises

If the stock price falls while the call price rises, the call option's implied volatility must have _______.

  What is your best estimate of the company cost of equity

If the stock sells for $40 per share, what is your best estimate of the company's cost of equity?

  Forward rate currently exhibits discount

Assume that the annual U.S. interest rate is currently 8% and Germany's annual interest rate is currently 9%. The euro's 1-year forward rate currently exhibits a discount of 2%.

  Purchased eleven acres of land costing

Some time ago, Julie purchased eleven acres of land costing $14,690. Today, that land is valued at $27,514. How long has she owned this land if the price of the land has been increasing at 4 percent per year?

  About the monthly payment

You want to buy a new sports car from Muscle Motors for $68,000. The contract is in the form of a 72-month annuity due at an APR of 6.75 percent. What will your monthly payment be?

  What is the companys weighted average cost of capital

Using the information from the two previous problems, what is the Capital Structure mix on a dollar value basis for the BA707 and AB300 companies? What is the company’s weighted average cost of capital? What is the value of the company? What is the v..

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