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1. The expected return on the market portfolio is 9.6%, while Treasury bills are yielding 1.6%. What expected return is predicted by the CAPM for a stock with a beta of 0.5? Enter answer in percents.
2. Scite Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 2 years to maturity that is quoted at 108.6 percent of face value. The issue makes annual payments and has a coupon rate of 8.7 percent annually. What is the firm's pretax cost of debt? (Enter answer in percents.)
3. Borkshire Castaway has preferred stock outstanding that is currently selling for $52.05 a share and pays a dividend of $3.4 per share. The rate of return on the market portfolio is 8.51 percent, the risk free rate is 3.2 percent, and the firm's tax rate is 31 percent. What is Borkshire's cost of preferred stock? Enter answer in percents.
4. Parole Co. has 77,910 bonds outstanding that are selling at par value. The bonds yield 8.5 percent. The company also has 5.4 million shares of common stock outstanding. The stock has a beta of 1.2 and sells for $46.3 a share. The U.S. Treasury bill is yielding 3.5 percent and the market risk premium is 8.3 percent. Parole's tax rate is 32 percent. What is the firm's weighted average cost of capital? Enter the answer in percents.
Which of the following investments has a larger future? value: A? $100 investment earning? 10% per year for 5 years or a? $100 investment earning? 5% per year for 10? years?
Use a CAPM single-index framework to find the beta for CAT. Interpret the coefficient in terms of both magnitude and statistical significance.
What is Megatropolis Hospital’s operating margin?
Which of the following is NOT a key variable in the equation for the capital asset pricing model? Which of the following statements is NOT true regarding beta?
You will make the following investments for a boat at the lake: $3,300 today, $2,000 at the end of year 1, and $1500 at the end of year two.
mk robe-stones mk-r-s is a big manufacturing firm which was set up as a limited company 6 years ago in 2009 by a family
Determine the net present value of the proposed mining project. Should the project be accepted?
The Argentine peso was fixed through a currency board at Ps1.00/$ throughout the 1990s. In January 2002, the Argentine peso was floated. On January 29, 2003, it was trading at Ps3.20/$. During that one-year period, Argentina’s inflation rate was 20% ..
All the major world markets are considered efficient. In a well-diversified portfolio, company specific risks vanish and the total risk of the portfolio reduces to its market risk. Deviations from purchasing power parity can result in real foreign cu..
Which of the following is true regarding the stock on the ex dividend date?
Which of the following most accurately describes the coupon rate that Nicholas would have to pay on the convertible, callable bond?
The following transactions occurred during the year in the following sequence: Declared and distributed a 10% stock dividend on the outstanding common shares at a time when the common shares were selling for $15 per share. Calculate the par value per..
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