What is the beta value of a market portfolio

Assignment Help Finance Basics
Reference no: EM133001132

(a) What is the beta value of a market portfolio?

(b) What is the expected rate of return on a security with beta = 0?

(c) Given that risk-free rate = 3% and market return = 8%, for a stock with a beta of 1.4, what is the expected return of this stock under CAPM?

(d) Given that risk-free rate = 3% and market return = 8%, if a security - with a beta of 1.4 - actually delivers 7% return, under CAPM, is this security underpriced or overpriced? What should investors do to capture this opportunity? Please explain.

Reference no: EM133001132

Questions Cloud

Agency costs from the perspective of mncs : Agency costs seem to be larger for a multinational company (MNCs) than a purely domestic firm. Why? Suggests two ways of reducing agency costs from the perspect
Calculate ownership operating advantage : A family currently live in an apartment whose monthly rent is $1050. They are thinking of buying a house which would cost $250,000. They plan to live in this ho
Describe compounding or discounting : Describe compounding or discounting that is done more often than annually.
Performance of amoney manager in a recent month : Consider the following information regarding the performance of amoney manager in a recent month. The table represents the actual return of each sector of the m
What is the beta value of a market portfolio : (a) What is the beta value of a market portfolio? (b) What is the expected rate of return on a security with beta = 0?
Should markham industries make the change : Should Markham Industries make the change? Markham Industries is studying the profitability of a change in operation and has gathered
What is the current annual payment on the loan : Your client's parents have a business with a loan of $5,000,000 repayable at the end of each year at a nominal rate of 9.5% p.a., compounded monthly.
What would be the third year future value : 1. How much would be in your savings account in 11 years after depositing $150 today, if the bank pays 7% per year?
What is the monthly total cost equation : If the high-low method is used, what is the monthly total cost equation? C-Drive Components has collected the production data for the past four months.

Reviews

Write a Review

Finance Basics Questions & Answers

  Compute the company cost of equity capital

Calculating Cost of Equity. Halestorm Corporation's common stock has a beta of 1.15. If the risk-free rate is 3.6 percent and the expected return on the market.

  The finance division of a technology corporation

Imagine that you have completed an internship in the finance division of a technology corporation. Your boss, the financial manager, is considering hiring you for a full-time job.

  The recovery rate for each in the event of default is 50

suppose xyz corporation has two bonds paying semiannually according to the following tableremainingcoupont-bill

  Project manager managing projects

Identify two key challenges project managers must address in public sector infrastructure projects and discuss how these challenges are similar to and different from those experienced by a project manager managing projects within a corporate envir..

  Describe the budget shortfall

Describe the budget shortfall. Generate suggestions to address the shortfall. Explain the importance of liquidity in nonprofit organizations.

  How much will she have at the end of fourth year

she has decided to save $1,000 a quarter for the next four years in a bank account paying 12 percent interest (compounded quarterly). How much will she have at the end of fourth year? (Round to the nearest whole dollar)

  Straight-debt issue

A similar straight-debt issue would require an 12% coupon. What coupon rate should be set on the bonds-with-warrants so that the bond will sell for $1,000?

  What are the two sources of return on an investment which

1. discuss the three component of an investors required rate of return on an investment2. what are the two sources of

  Account in exactly one year

1. A couple invests $11,691.00 today in a money market fund that pays 6.00% per year. What is the value of this account in exactly one year?

  Projected dividend for the coming year

Alliances dividends are expected to grow at 25% per year for the next three years and then grow at a rate of 5% forever. If the required rate of return is 10% and the share currently sells for $30. What is the projected dividend for the coming yea..

  Discuss netflix business model

Discuss Netflix's business model, core products or services, growth prospects and key cost items.

  It determines the amount of capital that will be needed to

which steps is are the most critical? explain your rationale.the financial planthe financial planning process generally

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