Reference no: EM132757733

Question: 1. ABC Company's stock has a beta of 1.95, the risk-free rate is 2.25%, and the market risk premium is 7.00%. What is ABC's required rate of return using CAPM?

2. Hazel Morrison, a mutual fund manager, has a $60 million portfolio with a beta of 1.00. The risk-free rate is 3.25%, and the market risk premium is 6.00%. Hazel expects to receive an additional $40 million, which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 15%. What must the average beta of the new stocks be to achieve the target required rate of return?

3. Garvin Enterprises' bonds currently sell for $1,175. They have a 6-year maturity, an annual coupon of $95, and a par value of $1,000. What is their current yield?

4. Sadik Inc.'s bonds currently sell for $1,250 and have a par value of $1,000. They pay a $115 annual coupon and have a 15-year maturity, but they can be called in 4 years at $1,115. What is their yield to call (YTC)?

5. Moerdyk Corporation's bonds have a 15-year maturity, a 5.25% coupon rate with interest paid semiannually, and a par value of $1,000. The nominal required rate of return on these bonds is 6.75%. What is the bond's intrinsic value?