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1. Shell's stock price jumped when it announced that it discovered a large oil field in the Gulf of Mexico. This is an example of
A. Market risk
B. Unsystematic risk
C. Systematic risk
D. Undiversifiable risk
2. You are the CFO of a major pharmaceutical firm. A division manager has presented senior management with an investment opportunity.
The project would require an investment of $95 million today
If the project succeeds, it will be worth $1 billion in a year. You estimate that there is only a 10% chance that the venture would succeed. If it fails, then in a year you will scrap the project and all of your firm’s $95 million investment will be lost.
Whether the venture succeeds or fails is independent of general market conditions.
The risk-free rate is 3%, the expected return of the market is 12%, and the standard deviation of the market return is 20%. Ignore taxes.
What is the beta of the project? What is the appropriate discount rate for the project under the assumptions of CAPM?
A. 0 ; 3%
B. 1 ; 15%
C. 1 ; 12%
D. 0 ; 20%
Stock has a current price of 40.00, a beta of 1.5, and a dividend yield of 8%. if the treasury bill yield is 6% and the market portfolio is expected to return 19%, what should stock A sell for at the end of an investor's three year horizon?
Bay City Mining, Inc. has a price of $20 a share, outstanding shares of 2.5 million, retained earnings of $1 million dollars, and a dividend yield of 2 percent. It has a price-earnings ratio of a. 50, which is low by historical standards. b. 25, whic..
Find an article that discusses the European debt crisis in the context of government bonds.
Use the tax schedule in Table 2.3 to calculate Dakota’s income tax liability. What are Dakota’s average and marginal tax rates on taxable income?
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.79 million. The fixed asset falls into the three-year MACRS class. The project is estimated to generate $2,110,000 in annual sale..
A project is expected to create operating cash flows of $39,285 a year for three years.
T-bills are issued by the US government to cover the following except: their deficits. expenditures minus taxes. maturing government debt.all of the above are true.
If you purchased the bond at THE PRICE YOU COMPUTED AT (a) and sold it 5 years later, what would the rate of return of your investment be?
she sold the stock for $23 per share and paid a $58 brokerage commission from the proceeds. What annual rate of return did she receive an her investment?
Conduct a gap analysis for Anthony's Orchard and devise a benchmarking review for Anthony's Orchard. To do this, discuss recommended strategies and measures that will be useful to measure progress towards the objective in your gap analysis.
Gruber Corp. pays a constant $9 dividend on its stock. what is the current share price?
What is the price of this stock today given a required return of 11 percent?
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