What impact would this change have on the assets return

Assignment Help Financial Management
Reference no: EM131936574

(Interpreting Beta) A company wishes to assess the impact of changes in the market return on an asset that has a beta of 1.50.

(a). If the market return increased by 15%, what impact would this change have on the assets return?

(b). If the market decreased by 10%, what impact would this change have on the assets return?

(c). Would this asset be considered more or less risky that the market?

(d). If the market increased by 12% and the return increased by exactly the same amount, what would the new beta for this asset be?

Reference no: EM131936574

Questions Cloud

Shielded from liability by the firm : Backus sued the firm and Holden personally, but the latter claimed he was shielded from liability by the firm. Is Holden correct?
Write a program that plays with the user the game : Write a program that plays with the user the game commonly known as Twenty Questions. Also the program will learn and improve from playing each game.
Create ever smaller arrays of items : Create ever smaller arrays of items and then merge them to create a final, fully sorted array. In this challenge, you will have two sorted arrays
Sought judgment against them personally : Jacobsen and Kelly agreed to form an LLC. They filled out the appropriate paperwork and mailed it with their check to the secretary of state's office.
What impact would this change have on the assets return : If the market increased by 12% and the return increased by exactly the same amount, what would the new beta for this asset be?
Percent annual interest rate : If you are 30 today, how much must you save each year to meet your retirement goal if you plan to retire at 65?
What will one share of common stock be worth : What will one share of this common stock be worth 10 years from now if the applicable discount rate is 8.0 percent?
Compute the cash flow using given format : Assume a corporation has earnings before depreciation and taxes of $104,000, depreciation of $42,000 and that it is in a 30 percent tax bracket.
What is the beta of portfolio : You also own $44,000 of Rent-N-Co (beta = 1.88) and $21,800 of Lincoln Corporation (beta = -.72). What is the beta of your portfolio?

Reviews

Write a Review

Financial Management Questions & Answers

  What must be the one-year forward exchange rate

If the interest rate in the United Kingdom is 6 percent, the interest rate in the United States is 7 percent, the spot exchange rate is $1.75/£1, and interest rate parity holds, what must be the one-year forward exchange rate?

  Continuously compounded libor rates

Suppose that the 3 month and 6 month continuously compounded LIBOR rates are 3% and 3.5% respectively. Assume that LIBOR is used as the risk-free discount rate. Consider a company which plans to borrow in the future and fears that short term rates wo..

  Cash flows of mnc are generated from portfolio of currencies

The dollar net cash flows of an MNC are generated from portfolio of currencies.

  What are some of the advantage or disadvantage of this bill

Outline the major provisions of the Gramm Leach Bliley Act of 1999. Many experts considered this bill to favor larger multibank holding companies. What are some of the advantages or disadvantages of this bill to the largest and smallest commercial ba..

  Considering changing the firms production technology

The Generic Publications Textbook Company sells all of its books for $100 per book, and it currently costs $50 in variable costs to produce each text. The fixed costs, which include depreciation and amortization for the firm, are currently $2 million..

  Find the yield rate of this investment strategy

A corporation is going to have to pay a debt of $1,200,000 after one year, a debt of $1,500,000 after 2 years and $2,000,000 after 3 years. In order to set up an absolute matching strategy to pay these debts, the corporation may purchase: The spot ra..

  Find the price and earnings ratio for the stocks

Find the Price/Earnings ratio for the stocks of Apple, Ford Motor, and General Motors

  What is the pledgeable income and the financing condition

What is the pledgeable income? Write the financing condition. - Give the expression determining the market rate of interest.

  Calculate book value of an asset

Genetic Insights Co. purchases an asset for $10,359. This asset qualifies as a seven-year recovery asset under MACRS. Calculate book value of an asset.

  What size of your investment portfolio needs to be in order

According to the 4% rule, what the size of your investment portfolio needs to be in order for you to withdraw an initial annual amount of $250K?

  Greater the volatility of returns-the greater risk premium

"The greater the volatility of returns, the greater the risk premium" The risk premium is unrelated to the average rate of return "The lower the average return, the greater the risk premium." The risk premium is not affected by the volatility of retu..

  Homes are valued primarily using sales of comparable homes

Single-family homes are valued primarily using sales of comparable homes. Commercial real estate (CRE) property valuation is primarily based on:

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