User Account

All Pages

What is principal message of the capital asset pricing model

Assignment Help Accounting Basics
Reference no: EM132745575

Question: a. What is the principal message of the Capital Asset Pricing Model (CAPM)? What are its assumptions?

b. What is Beta? Is high beta good or bad for a company?

c. Which type of company will have a higher Beta: a fast food chain or a luxury cruise-ship company? Why?

d. Brimbank company shares has an expected return of 15%. The share's Beta is 1.2, the risk-free rate is 3% and the market risk premium is 6%. Based on this information do you think the share is overvalued or undervalued? Why?

e. A [particular share sells for $30. The shares' Beta is 1.25, the risk-free rate is 4%, and the expected return on the market portfolio is 10%. If you predict that the share's market price next year will be $33 (and no dividend), should you buy the share or not? Why?

Reference no: EM132745575

Questions Cloud

Motivate employees with feedback : Organization Management Can a supervisor motivate employees with feedback?
What steps can a company take to motivate : What steps can a company take to motivate their employees?
Operations management and project management go hand in hand : Many universities, industry professionals, and organizations feel that operations management and project management go hand in hand.
Analyzing the organizational hierarchy : How would you go about analyzing the organizational hierarchy to decide which managerial positions should be cut first?
What is principal message of the capital asset pricing model : What is the principal message of the Capital Asset Pricing Model (CAPM)? What are its assumptions? What is Beta? Is high beta good or bad for a company?
Identify two risks that may occur in a hospital project : Additionally, identify two risks that may occur in a hospital project of this size and explain how to potentially mitigate those risks.
Significance that culture and global influences : Describe the significance that culture and global influences have in project management efforts.
Discuss implications of decision : At 3:00AM, you are abruptly woken by the continuous ringing of your cellphone. It is Tony, your Chief Information Officer (CIO).
Through improved financial strategies and data management : Through improved financial strategies and data management, the supply chain of a company can improve their customer experience,

Reviews

Write a Review

Accounting Basics Questions & Answers

  Management and the investment community use both asset

management and the investment community use both asset valuation and future sales growth as indicators of managements

  On september 17 2013 ziltech inc entered into an agreement

on september 17 2013 ziltech inc. entered into an agreement to sell one of its divisions that qualifies as a component

  What boulder comprehensive income is

What Boulder comprehensive income is? Unrealized holding gains arising during the period on available-for-sale securities105,000

  Find what amount of federal taxes must pay

The bank which held her IRA account. Assume that her federal tax rate is 22%. What amount of federal taxes must she pay on her $3,000 withdrawal?

  Prepare journal entries to record the following

On June 30, Petrov Co. has $ 128,700 of accounts receivable. Prepare journal entries to record the following selected July transactions. Also prepare any footnotes to the July 31 financial statements that result from these transactions.

  How much was olives proceeds from the discounted note

On July 1, 2012, Olive discounted the note at a bank at an interest rate of P12%. How much was Olive's proceeds from the discounted note

  Examine book-value balance sheet for university products inc

Examine the following book-value balance sheet for University Products, Inc. What is the capital structure of the firm on the basis of market values?

  Calculate the companys return on sales

Average invested capital 4 500 000 and Cost of goods sold 4 950 000. Calculate the company's return on sales, investment turnover and ROI for the past year

  Explain the importance of doing the closing entries

After graduating from Berkeley College and passing your CPA exam, you have opened up an accounting firm that offers tax and consulting services to clients.

  What was the purchase price cannon paid

During 2012 Angel, Inc. reported net income of $210,000, What was the purchase price Cannon paid for its investment in Angel, Inc

  Prepare a budget using the activity-based approach

Prepare a budget using the activity-based approach for the costs of inspecting, processing, loading, and miscellaneous activities

  Explain the primary objectives of mutual funds

If growth, income, and capital preservation are the primary objectives of mutual funds, why do we bother to categorize funds by type?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd