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Question: SECURITY MARKET LINE You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock Investment Stock's Beta Coefficient $160 million 0.5 120 million 1.2 80 million 1.8 80 million 1.0 60 million 1.6 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 6%, and you believe the following probability distribution for future market returns is realistic: Probability Market Return 0.1 0.2 0.4 12 0.2 30 0.1 50 a. What is the equation for the Security Market Line (SML)? (Hint: First, determine the expected market return.) b. Calculate Kish's required rate of return. Learning. Rights Reserved May not be copied, scanned or duplicated in whole erin part. Due to electronic rights. some third party cornen may be suppressed from the cBook andlar eCapoerisl that any suppressed content does not materially affectthe overall loaming experience. Cengage Learming reserves the right remove additional content at any time if subsequent rights mestrictions mq it. Risk and Rates of Return 297 c. Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount needed to take a position in the stock is $50 million, it has an expected return of 15%, and its estimated beta is 1.5. Should Kish invest in the new company? At what expected rate of return should Kish be indifferent to purchasing the stock?
complete the external environmental scan for your organization. perform an internal competitive environmental scan for
Why are banker’s acceptances so popular for international transactions?
Calculate the net present value (NPV) for the following 20-year projects. Comment on the acceptability of each. Assume that the firm has an opportunity cost of 14%.
you own a call option with time to expiration. the common stock is selling for 11.25 and your exercise price is 12.
barry company is considering a project that has the following cash flow and wacc data. what is the projects npv? note
1 which of the following is a reason why an expertise in international finance is important?a because the process of
Besides investment banking relationship , list at least three other sources of potential conflicts that can compromise an analyst's independence.
Assume that over the past four years, Alex has contributed $45,000 to his 401(k) and his employer has contributed $115,000 to the plan. The plan has an account balance of $175,000. What is Alex's vested account balance in his 401(k)?
What is the economic ordering quantity? How many orders will be placed during the year? What will the average inventory be? What is the total cost of ordering and carrying inventory?
Cheeseburger and Taco Company purchases 7,199 boxes of cheese each year. It costs $10 to place and ship each order and $5.12 per year for each box held as inventory. The company is using Economic Order Quantity model in placing the orders.
income statement preparation by absorption variable costing.updike inc. has the following information for its product
These cash flows include depreciation expenses. Calculate NPV and IRR for each machine and select the best choice for the MIT Whitehead Institute.
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