What is the variance of returns for this investment

Assignment Help Financial Management

Reference no: EM131346734

1. Given the following information, what is your best estimate for the firm s cost of equity on January 2, 2012, if the stock sells for $42 on that day? Date Dividend 12/31/07 $1.45 12/31/08 $1.68 12/31/09 $1.95 12/31/10 $2.27 12/31/11 $2.63 a. About 16% b. About 22% c. About 23% d. Cannot be determined e. None of the above

2. An investment earned the following returns for the returns 1998 through 2001: 30%, 40%, 15%, and 7%. What is the variance of returns for this investment? a. 0.0165 b. 0.0658 c. 0.1481 d. 0.2300 e. None of the above

3. Asset A has an expected return of 14.5% and a beta of 1.15. The risk-free rate is 5%. What is the market risk premium? a. 8.26% b. 11.96% c. 13.26% d. 16.96% e. None of the above

Reference no: EM131346734

Questions Cloud

When issued and the annual interest payment : Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the annual interest payment was then 13 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final ans..

Portfolio invested in stocks : Ed Lawrence has invested $100,000. Of that, $30,000 is invested in IBM stock, $25,000 is invested in T-bills, and the remainder is invested in corporate bonds. Which of the following is true regarding his portfolio? Ed has 30% of his portfolio invest..

Define and explain net present value as it pertains new cafe : FINA425- Answer the following questions based on your P/B and NPV calculations: Do you think the project should be accepted? Why? Define and describe Net Present Value (NPV) as it pertains to the new cafe.

What is beta for portfolio equally weighted in four assets : What is the beta for a portfolio equally weighted in four assets: A, the market portfolio; B, which has half the risk of A; C, which has twice the risk of A; and D, which is risk-free? a. 0.219 b. 0.875 c. 1.000 d. It depends on what beta the market ..

What is the variance of returns for this investment : Given the following information, what is your best estimate for the firm s cost of equity on January 2, 2012, if the stock sells for $42 on that day? An investment earned the following returns for the returns 1998 through 2001: 30%, 40%, 15%, and 7%...

Generate normally distributed random numbers : The polar method can be used to generate normally distributed random number in the range 0 to 1. It involves first generating two uniform random numbers r1 and r2. Then if the expression for d below is ≥1 two normally distributed random numbers can..

Report amount of capital spending for the past three years : For each company, report the amount of capital spending for the past three years. Quantitatively determine whether the amount of capital spending has been consistent or if it has fluctuated.

Explore the skills and qualifications related to role : Knowing which career you want to pursue is an important first step to tackling your job search and career goals. However, simply identifying an ideal position will not propel you to obtaining these goals. In order to achieve success, it's essenti..

What is current price per share : Huskie Motors just paid an annual dividend of $1.00 per share. Management has promised shareholders to increase dividends at a constant rate of 5%. If the required return is 12%, what is the current price per share.

User Account

All Pages