What is the risk premium for stock

Assignment Help Financial Management
Reference no: EM131905363

1. Assume the overall market has a risk premium of 8.3 percent and the risk-free rate is 3.6 percent. What is the risk premium for a stock that has a .87 beta and a standard deviation of 11.2 percent?

2. You wish to accumulate $100,000 through monthly payments of $700. If you can earn interest at an annual rate of 4% compounded monthly, how long (to the nearest year) will it take to accomplish your goal?

3. The Sleeping Flower Co. has earnings of $1.75 per share. The benchmark PE for the company from a comparable analysis is 18. What stock price would you consider appropriate? What if the benchmark PE were 21?

Reference no: EM131905363

Questions Cloud

Leverage the time value of money : Your financial advisor has recommended saving for retirement to ensure you have enough and to leverage the time value of money.
Make the net present value equal to zero : What is the annual cash revenue that will make the net present value equal to zero.
Capital structures-all-equity plan and levered plan : RAD Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II).
What is the company target debt to asset ratio : What is the Company's target debt to asset ratio? How many shares of the Company's stock must you sell to undo the leverage?
What is the risk premium for stock : What is the risk premium for a stock that has a .87 beta and a standard deviation of 11.2 percent?
How much will you receive each quarter : Your pension plan is an annuity with a guaranteed return of 4% per year (compounded quarterly). How much will you receive each quarter?
Cash flow be under proposed capital structure of firm : What will Ms. Brown’s cash flow be under the proposed capital structure of the firm? Assume that she keeps all 150 of her shares.
What is incremental cash flow from selling machine : If you sell the machine today? (after three years of? depreciation) for $712,000?, what is your incremental cash flow from selling the? machine?
Invest in stock portfolio : You have $10,000 to invest in a stock portfolio. Your goal is to create a portfolio with an expected return of 11.1%.

Reviews

Write a Review

Financial Management Questions & Answers

  Amount for cost of goods manufactured on income statement

Name the three inventory accounts for a manufacturing business and indicate the order in which they should be presented on the Balance Sheet. Indicate the inventory accounts used by microsoft corporation and include the amounts of each. What is the a..

  Define marginal tax rates

Imagine a friend says that he doesn’t want to take a job that pays slightly more money only because he will be bumped into the next tax bracket and end up taking home less income after taxes.how would you advise this friend? Define marginal tax rates..

  Enterprise value and stock price

FFDP Corp. has yearly sales of $29.4 million and costs of $14.7 million. The company’s balance sheet shows debt of $55.4 million and cash of $39.4 million. There are 1,960,000 shares outstanding and the industry EV/EBITDA multiple is 8.9. What is the..

  Perfectly negative correlated returns-creation of portfolio

Combining two assets having perfectly negative correlated returns will result in the creation of a portfolio with an overall risk that______.

  Put option on stock with current price

You are considering purchasing a put option on a stock with a current price of $34.

  What is cost of equity after recapitalization

Bruce & Co. expects its EBIT to be $89,000 every year forever. The company can borrow at 5 percent. The company currently has no debt, its cost of equity is 8 percent, and the tax rate is 35 percent. The company borrows $102,000 and uses the proceeds..

  What are tie ratio and return on invested capital

What are its TIE ratio and its return on invested capital (ROIC)?

  Where will the tax inefficiency be greater

The government of Washlovia wants to impose a tax on clothes dryers. - Where will the tax inefficiency be greater? Explain.

  Correct about the early exercise of american options

Which of the following statements is correct about the early exercise of American options?

  What are two other ways swiss air might hedge

On January 2d, 2017, Boeing expects to send 5 787s from its plant in Seattle, WA to Swiss Air, which it will sell on 270-day terms at $125 million each. Thus Boeing will receive payment from Swiss Air on September 27th, 2017. What are two other ways ..

  Low levels of inventory lead to higher profit margins

Short term debt tends to be more expensive than long term debt. Low levels of inventory lead to higher profit margins. Maturity matching is generally considered to be an aggressive financing policy.

  Define what libor is and how its computation is governed

Give two examples of interest-rate derivatives that derive their values from LIBOR, briefly explaining what they are and how they work.

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