The market price of a security

Assignment Help Financial Management

Reference no: EM131054591

The market price of a security is $70. Its expected rate of return is 12%. The risk-free rate is 7%, and the market risk premium is 7%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity.(Round your answer to 2 decimal places.)

Market price $

Reference no: EM131054591

Questions Cloud

What is the value of this annuity five years from now : A 7-yr annuity of fourteeen $10,600 semi-annual payments will begin 9 years from now, with the first payment coming 9.5 years from now. If the discount rate is 9 percent compounded monthly, what is the value of this annuity five years from now? If th..

Expected rate of return on the market : A stock has an expected return of 7%. What is its beta? Assume the risk-free rate is 4% and the expected rate of return on the market is 12%.

Compute expected return and standard deviation of return : Compute the expected return and the standard deviation of return for 4 portfolios with different weights w on asset A (and therefore weight 1-w on B): w= -0.5, w=0.3, w=0.8, w=1.3. Then sketch a porfolio frontier with the 4 portfolios, asset A and as..

Mutual fund at the beginning of the year : You invested $70,000 in a mutual fund at the beginning of the year when the NAV was $38.21. At the end of the year the fund paid $.36 in short-term distributions and $.53 in long-term distributions. If the NAV of the fund at the end of the year was $..

The market price of a security : The market price of a security is $70. Its expected rate of return is 12%. The risk-free rate is 7%, and the market risk premium is 7%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assu..

The growth rate of industrial production-inflation rate : Suppose two factors are identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 6% and IR 5%. A stock with a beta of 1 on IP and 0.4 on IR currently is expected to provide a rate..

Depreciation is straight-line to zero : Gold Star Industries is contemplating a purchase of computers. The firm has narrowed its choices to the SAL 5000 and the HAL 1000. Gold Star would need seven SALs, and each SAL costs $3,150 and requires $340 of maintenance each year. Assume that the ..

About the rate anticipation : Rate anticipation is?

When creating bond investment strategy : When creating a bond investment strategy, one should consider his: investment goal; investment horizon; risk tolerance; tax status; all of the above

User Account

All Pages