What must be the risk-free rate

Assignment Help Financial Management
Reference no: EM13907290

Assume both portfolios A and B are well diversified, that E(rA) = 14% and E(rB) = 14.8%. If the economy has only one factor, and βA = 1 while βB = 1.1, What must be the risk-free rate? 

Reference no: EM13907290

Questions Cloud

Planning to finance expansion-what will the conversion price : The Tsetsekos Company was planning to finance an expansion. The principal executives of the company all agreed that an industrial company such as theirs should finance growth by means of common stock rather than by debt. What will the conversion pric..
Calculate the total expences : Trying to fugure out how to enter a formula in a cell(d10) that multiplies 30 by the value in another cell (c27), then make the other cell (c27) an absolute cell reference in the formula. Copy the formula to cells d11:d13, and then calculate the t..
Given the unbalanced chemical equation : Given the following unbalanced chemical equation: Al + Cl2-> AlCl3,  balance the equation.  How many moles of AlCl3 are produced from 5 mole of Cl2? Show your work.  What is the molar mass of AlCl3? Show your work.  Calculate the nmber of grams of Al..
Britney brown, the plant manager of lmn co. s chicago plant : Britney Brown, the plant manager of LMN Co. s Chicago plant, is responsible for all of that plants costs other than her own salary.
What must be the risk-free rate : Assume both portfolios A and B are well diversified, that E(rA) = 14% and E(rB) = 14.8%. If the economy has only one factor, and βA = 1 while βB = 1.1, What must be the risk-free rate?
Shares of common stock outstanding : Tom and Jerry's has 2.1 million shares of common stock outstanding, 2.1 million shares of preferred stock outstanding, and 11.00 thousand bonds. If the common shares are selling for $13.10 per share, the preferred shares are selling for $10.10 per sh..
Given that the molar mass of h2so4 : (a) Given that the molar mass of H2SO4 is 98.1 grams, determine the number of grams of H2SO4 needed to prepare 0.2 L of a 0.5 M H2SO4 solution. Show your work.
About an investment deal : Your friend has given you a hot tip about an investment deal that will pay off $6,000 a year at the end of each of the next three years. If your required rate of return for investments with this degree of risk is 7%, approximately how much is the inv..
Design a menu driven program for a florist : Design a menu driven program for a florist. The first screen asks the user to choose indoor plants, outdoor plants, nonplants items, or quit. When the user chooses indoor or outdoor plants, list at least three appropriate plants of your choice.

Reviews

Write a Review

Financial Management Questions & Answers

  How institutional investors and individuals participate

How institutional investors and individuals participate in money, stock, and bond markets, and equity securities? Describe how each one of these markets is utilized by each type of investor.

  Expenses for water treatment at a state park

Expenses for water treatment at a state park are expected to be $60,000 now, $25,000 in year one, and $10,000 per year thereafter forever. At an interest rate of 8% per year, the capitalized cost of the treatment is nearest to:

  About the impact of change in financial reporting standards

Which is least likely one of the conclusions about the impact of a change in financial reporting standards that might appear in management's discussion and analysis?

  About the current operating capacity

Alter Bridge Mfg., Inc., is currently operating at only 88 percent of fixed asset capacity. Current sales are $680,000. Fixed assets are $420,000 and sales are projected to grow to $830,000. How much in new fixed assets are required to support this g..

  How much of the parking benefit must lamont include

LaMont works for a company in downtown Chicago. The firm encourages employees to use public transportation (to save the environment) by providing them with transit passes at a cost of $296 per month.

  Prepare a statement showing the incremental cash flows

Prepare a statement showing the incremental cash flows for this project over an 8-year period and calculate the payback period (P/B) and the net present value (NPV) for the project.

  Value of a bond in relation to annual discounting

What effect does the use of semi-annual discounting have on the value of a bond in relation to annual discounting?

  Residual distribution policy

Puck’s Company has a capital budget of $1.1 Million. Puck’s company desires to maintain a target capital structure which is 35% debt and 65% equity. Puck’s company forecasts that its net income this year will be $800,000. If Puck’s company follows a ..

  Dividends are expected to grow at a rate

Yang Corp. is growing quickly. Dividends are expected to grow at a rate of 31 percent for the next three years, with the growth rate falling off to a constant 6.6 percent thereafter.

  Present an example of a business situation

Present an example of a business situation that you believe would lend itself to the use of a quantitative business model. Clearly explain how the model could be used in this situation.

  Budgeted sales-incremental revenues

Carry-ALL plans to sell 1,300 carriers next year and has budgeted sales of $46,000 and profits of $22,000. Variable costs are projected to be $20 per unit. Michael Co. offers to pay $24,500 to buy 570 units from Carry-ALL.

  Law print the annual percentage rate

Master Card and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements. If the APR is stated to be 18.00%, with interest paid monthly, what is the card's EFF%?

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