What is the beta of the firm

Assignment Help Financial Accounting
Reference no: EM133060676

Question - Beta of firm and idiosyncratic risk - The stock price of Beavers, a logging firm, tends to increase by 50% on average when the economy is booming. When the economy is weak, it goes down by 30%. At the same time, the market portfolio tends to increase by 57% in booms and decrease by 35% during periods of weak economy.

a. What is the beta of the firm? How would you interpret it?

b. What is the beta of the firm if it bears only idiosyncratic, firm-specific risk?

Reference no: EM133060676

Questions Cloud

Activity - identifying and communicating data issues : Describe the situation and how it relates to the data issue you have been allocated. Be prepared to answer questions from your ‘colleagues'
Define the term yield curve : 1. Define the term "yield curve." What changes does a steepening yield curve imply?
Discuss the pros and cons of the free trade regime : Reasoning with clear ideas and examples, discuss the pros and cons of the free trade regime established after WWII.
What public opinion cleavages : What public opinion cleavages do you think will be the most important in the next few decades of American politics?
What is the beta of the firm : The market portfolio tends to increase by 57% in booms and decrease by 35% during periods of weak economy. What is the beta of the firm
Write down the timeline of cash flows : The cost of investment is NOK800 million upfront. Write down timeline of cash flows. If you look at time 1 onwards, how do we define this cash flow structure
Create a wordcloud or infographic about its content : Create a Wordcloud or infographic about its content. Upload your visualisation to the discussion board 4.2 Visualisation Discussion Forum Post
Explain one social and political influence : Explain one social and one political influence these crimes and punishments had on the current U.S. criminal justice system.
Why is a preference share called hybrid security : Why is a preference share called hybrid security? Do you agree that it combines the worst features of ordinary shares and bonds

Reviews

Write a Review

Financial Accounting Questions & Answers

  How much can she spend in each year after she retires

After the last withdrawal there will be $250,000 left in the account. Under these assumptions, how much can she spend in each year after she retires

  Journal entries for prepaid expenses- insuranceprepaid

journal entries for prepaid expenses- insurance.prepaid expenses- insurancea use the horizontal model or write the

  What is cost of common equity for callahan technologies inc

Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. %

  What is the fixed cost per unit and variable cost per unit

If the Flash corporation makes 400,000 units, what is the fixed cost per unit and variable cost per unit? Calculate the variable cost per unit.

  During 2011 and 2012 faulkner manufacturing used the

during 2011 and 2012 faulkner manufacturing used the sum-of-the-years-digits syd technique of depreciation for its

  Find the share price before the issue

The issue is with a 20% discount on the price of the shares. If the value of a subscription right is equal to €1.2, find the share price before the issue

  What would be the tax consequence to bibi

If Bibi placed it in a fix deposit account at 6%, what would be the tax consequence to Mustapha? What would be the tax consequence to Bibi?

  What is Double K net cash provided by operations

Gain on sale of securities held-to-maturity financial assets 3,000. Based on this information, what is Double K's net cash provided by operations

  Prepare low quality financial statements

Determine which of the following provides motivation for a company to prepare low quality financial statements?high earnings expectations from investors

  Compute the future value of two options

Compute the future value of these two options at the end of the ten-year timeline. How would I go about solving for this problem?

  What sunland company times interest earned was

An analysis of the income statement revealed that interest expense was $70000. Sunland Company's times interest earned was

  General fund general journal to record the issuance

During Fiscal year 2014, the City of Hickory Hills issued purchase orders to various vendors in the amounts shown for the following functions of the city: Prepare a summary journal entry in the General Fund general journal to record the issuance of p..

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