Under-valued or over-valued

Assignment Help Finance Basics
Reference no: EM131693197

Under/Over Valued Stock

A manager believes his firm will earn a 16.3 percent return next year. His firm has a beta of 1.53, the expected return on the market is 14.3 percent, and the risk-free rate is 4.3 percent. Compute the return the firm should earn given its level of risk and determine whether the manager is saying the firm is under-valued or over-valued.

Reference no: EM131693197

Questions Cloud

Tips capital return : What was the capital gain of the TIPS in dollars? (Round your answer to 2 decimal places.)
What is the average monthly return : The past five monthly returns for K and Company are 6.05 percent, 5.93 percent, -.25 percent, 5.05 percent, and 9.05 percent. What is the average monthly return
What is your definition of perception : What is your definition of perception. Is it objective or subjective
Determining the under-over valued stock : A manager believes his firm will earn a 11.95 percent return next year. His firm has a beta of 1.43, the expected return on the market is 9.3 percent
Under-valued or over-valued : Compute the return the firm should earn given its level of risk and determine whether the manager is saying the firm is under-valued or over-valued.
Develop a proposal for a health promotion project : Develop a proposal for a health promotion project relevant to your local government population or the community area where you are currently living
Discuss blue cross blue shield insurance : What would your sales pitch be to entice someone to buy Blue Cross Blue Shield insurance
Maximum price in light of the dividend payment logistics : If the appropriate rate of return on this stock is 11 percent per year, and the stock consistently goes ex-dividend 30 days before dividend payment date
Fill the missing data for each job in table : Cost Flows Consider the following independent jobs. Overhead is applied in Department 1 at the rate of $6 per direct labor hour.

Reviews

Write a Review

Finance Basics Questions & Answers

  Small motor vehicle repair garage

Rory, Marsha & Chris have a small Motor Vehicle Repair Garage. They have been in business together for the last 6 years. They would like to expand their business as trade has been growing over the last 3 years. In order to expand they need to take..

  Difference between value of swap and stock forward contract

Is the value of a forward contract on a stock St necessarily bounded above and below? Explain the key difference between the value of a swap and a stock forward contract.

  Discuss the importance to inventor of the controversy

Why knowledge of changes in accounting principles is important analysis purposes.

  Fixed exchange rate affects companies such as blades

Determine the fundamental manner in which a fixed exchange rate affects companies such as Blades.

  Provide a specific example of a company that took an action

provide a specific example of a company that took an action that might have increased short run profits but had the

  Calculate the amount of the salvage value

Calculate the amount of the salvage value which would make you indifferent between leasing and buying.

  Find the amounts of the three parts of the investment

An investment of $44,000 was made by a business club. The investment was split into three parts and lasted for one year. The first part of the investment earned 8% interest, the second 6%, and the third 9%. Total interest from the investments was ..

  Important aspects in running a small business

It is often said that cash flow is one of the most important aspects in running a small business. If you were the manager of a small business and you made yearly repayments on a loan, would you rather make loan repayments at the beginning ofeach y..

  What dollar intrinsic value should melanie place

Melanie Gibson places a nominal annual required rate of return of 14 percent on these bonds. What dollar intrinsic value should Melanie place on one of these bonds (assuming semiannual discounting)?

  What is your estimate of carpetto cost of common equity

Assuming you have equal confidence in the inputs used for the three approaches, what is your estimate of Carpetto's cost of common equity? Round your answer to two decimal places.

  Explain in what sense insurance policy on its receivable

Suppose your company has purchased a put option on the euro to manage exchange exposure associated with an account receivable denominated in that currency. In this case, your company can be said to have an "insurance" policy on its receivable. Explai..

  Bonds for some much-needed expansion projects

Chamberlain Co. wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 5 percent coupon bonds on the market that sell for $1094, make semiannual payments, and mature in 20 years.

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