What is the beta of this project

Assignment Help Finance Basics
Reference no: EM13304696

Consider an economy with three states which occur with probability (0.2, 0.4, 0.4). Suppose a firm has a project which generates the state dependent cash flows (100, 200, 200) at t=1. The investment costs are 170 at t=0. The firm owns this money. The market portfolio generates the payoff (200, 250, 300) and has an expected return of 8%. The risk free rate is 3%. Suppose CAPM holds.

What is the Beta of this project?

 

Reference no: EM13304696

Questions Cloud

Find the velocity of the air downstream of the restriction : Find the velocity of the air downstream of the restriction, and show that the enthalpy is essentially the same before and after the throttling process. Also find the change of entropy.
Advise brain of the tax consequences arising from the sale : Advise George in each of the above situations as to his tax liabilities. Also advise him as to whether his receipts are income or capital on general principles.
What interest rate per six months was earned by the company : On January 1, 2005, this bond was sold for 110,000 dollars. What interest rate per six months was earned by the company on the BMI bond?
What will temperature rise of lead be if there is no cooling : Consider the steady-flow energy equation applied to the given extrusion process. Since the die is horizontal then there will be no change in potential energy from inlet to outlet. Hence the potential energy terms can be neglected.
What is the beta of this project : The firm owns this money. The market portfolio generates the payoff (200, 250, 300) and has an expected return of 8%. The risk free rate is 3%. Suppose CAPM holds.
What is the ground state energy of the electron : Take element Z = 21 from the periodic table. Ionize it 20 times so that there is only one electron left orbiting around the nucleus. What is the ground state energy of the electron
Find the magnitude of r dot and theta double dot at t : If r = (theta)2 and theta = 2t, find the magnitude of r dot and theta double dot when t = 2 s
Compute the angle between the axes of the polarizers : Unpolarized light with an intensity of 980 W / m2 is incident on a polarizer with an unknown axis. What is the angle between the axes of the polarizers
At what depth will water flow in a 10 m wide channel : At what depth will water flow in a 10 m wide rectangular channel, if n=0.01, S=0.0015 and Q=9m^3/s

Reviews

Write a Review

Finance Basics Questions & Answers

  Construct a bond amortization table

Watson Bottle Corporation sold $400,000 in long-term bonds for $351,040. The bonds will mature in ten years and have a stated interest rate of 8% and a yield rate of 10 percent.

  Prepare a table that shows the profit and payoff

Options on a stock with strike prices - Prepare a table that shows the profit and payoff for both spreads

  Which plan will generate the higher eps

A detailed financial analysis of the firm's prospects suggests that the Long - term EBIT will be above $304,000 annually. Taking this into consideration , which plan will generate the higher EPS?

  Is ytm the same thing as the coupon rate

Two years from now, the required return on the same bond is 8 percent. What is the coupon rate on the bond now? The YTM?

  Determine the different types of financial reports

Determine the different types of financial reports you communicate with in accounting, and what do they tell you?

  Determine the net investment

Airstat is replacing an old stamping line that cost 80,000$ 5 years ago, with a new, more efficient equipment that will cost $225,000. Shipping and installation cost an additional $20,000.

  Explain role of market efficiency in underpricing theories

One method utilized by corporation to obtain the long-term capital necessary to run & grow their businesses is by providing the general public with the option to buy stocks.

  How much will your dream car cost by the time

You hope to buy your dream car four years from now. Today, that car costs $82,500. You expect the price to increase by an average of 4.8 percent per year over the next four years. How much will your dream car cost by the time you are ready to buy ..

  By how much will their earnings after tax change

By how much will their earnings after tax change if they choose the more aggressive financing plan instead of the more conservative?

  Calculate the tax disadvantage to organization

Then recalculate the tax disadvantage using the same income but with the maximum tax rates that existed before 2003. These rates were 35% (Tcg=.15) on corporate profits and 38.6 % (Tp=.386) on personal investment income.

  What is meant by the term toehold

What is meant by the term toehold? How does the toehold help bidders in an Mergers & Acquistion situation?

  Use more control variables rather than depend

In the world of bueisness Why not use more control variables rather than depend on randomization as the means of controlling extraneous variables.

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