What is the risk free rate

Assignment Help Finance Basics
Reference no: EM132664692

You have been tasked to arrive at the cost of capital for the firm that you are employed in for a road show as you intend to raise more financing. It is a listed firm and based on your firm's returns and the past market returns, you have arrived at a beta of 1.6 for your firm. You have studied that the best estimate of the expected market risk premium is the past market risk premium and it is currently at 7%. You arrived at a cost of capital for this firm as 14%. Your manager wants to look at your numbers closely and asked you about the risk free rate you incorporated in your calculations. What is the risk free rate?

 

 

 

Reference no: EM132664692

Questions Cloud

Which would found in current liabilities on balance sheet : Which of the following would only be found in current liabilities on the balance sheet? Which of the following represent(s) a bond valuation account?
Calculate duration of the bond : Consider a 3-year bond with 14 percent semi-annual coupon payments and currently priced to yield 12 per cent per annum.
Reflect on the impact of clinical systems on outcomes : Review the Resources and reflect on the impact of clinical systems on outcomes and efficiencies within the context of nursing practice and healthcare delivery.
Identify the top three major safety and health issues : Recall your chosen firm and industry you have been using throughout course. For this assignment, you will identify the top three major safety and health issues
What is the risk free rate : Your manager wants to look at your numbers closely and asked you about the risk free rate you incorporated in your calculations
Discussed variety of macro and micro nutrient : We have discussed a variety of macro and micro nutrients. All are essential but the amount we need changes throughout our life cycle.
Compute basic earnings per share for year 4 : Compute basic earnings per share for Year 4. Does TJX, Inc. have a simple capital structure or a complex capital structure?
What evidence-based protocols can the nurse utilize : What evidence-based protocols can the nurse utilize for prevention of pressure injuries? Develop a nursing CARE PLAN for an older adult at risk for pressure.
What is the corrected annual yield : Treasury discount yield on three month (90 days) T-bills was 2.36%. Using your answer for the price, what is the "corrected" annual yield?

Reviews

Write a Review

Finance Basics Questions & Answers

  Exchanges in the fitting books

Record the accompanying exchanges in the fitting books of unique section and show how they will be posted. Accept receipt numbers, folio number, and so forth.

  Available for distribution to the equity partners

What is the cash available for distribution to the equity partners under each of the following scenarios?

  What is the investment opportunity curve and how is it

what is the investment opportunity curve and how is it

  What is the net incremental tax cash flow

The firm's marginal tax rate is 34 percent and its required rate of return is 12%. What is the net incremental tax cash flow?

  Determine the investment net present value

Your firm is considering an investment that will cost $920,000 today. The investment will produce cash flows of $450,000 in year 1, $270,000 in years 2.

  What is the expected value of your firm stock

Assume that the average firm in your company's industry is expected to grow at a constant rate of 6% per year and the average dividend yield is 7%.

  How much does the security cost

A price-linked investment pays $300 if the oil price over the next year increases by more than 5%, an event that can happen with a 55% probability. Otherwise, it pays $60. If the expected return on the security is 12%, how much does the security c..

  Determine change in accounts receivable policy

How will this change in accounts receivable policy affect Dakota's net income, total asset turnover, equity multiplier, ROA, and ROE?

  How might these problems be alleviated

How might (a) seasonal factors and (b) different growth rates distort a comparative ratio analysis? Give some examples. How might these problems be alleviated?

  Provide a complete citation for the article

Provide a complete citation for the article.- Provide a photocopy of the suggestion for future research.- Briefly describe how the future research study might be conducted.

  Last year artworks inc paid a dividend of 350 you

last year artworks inc. paid a dividend of 3.50. you anticipate that the companys growth rate is 10 percent and have a

  What is the hsbc yield-to-maturity

The HSBC bond has an 8% coupon rate (semi-annual interest), a maturity value of BDT. 1,000, matures in 5 years, and a current price of BDT. 1,200.

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