What must the expected return on this stock be

Assignment Help Financial Management
Reference no: EM13877633

A stock has a beta of 1.25, the expected return on the market is 12 percent, and the risk-free rate is 2 percent. What must the expected return on this stock be? (Show your work.)

Reference no: EM13877633

Questions Cloud

Future values of single cash flows for different periods : Find the following values, using the equations, and then work the problems using a financial calculator to check your answers. Disregard rounding differences. An initial $400 compounded for 2 years at 4.5%. Round your answers to the nearest cent. The..
What is the operating cash flow or OCF : Hamble, Inc., has sales of $19,070, costs of $10,460, depreciation expense of $2,530, and interest expense of $1,600. If the tax rate is 35 percent, what is the operating cash flow, or OCF?
What is its future value and present value : Present and Future Value of an Uneven Cash Flow Stream An investment will pay $200 at the end of each of the next 3 years, $400 at the end of Year 4, $500 at the end of Year 5, and $700 at the end of Year 6. If other investments of equal risk earn 12..
What is the expected return on the portfolio : You own a portfolio that has $2,500 invested in Stock A and $3,500 invested in Stock B. If the expected returns on these stocks are 10 percent and 16 percent, respectively, what is the expected return on the portfolio?
What must the expected return on this stock be : A stock has a beta of 1.25, the expected return on the market is 12 percent, and the risk-free rate is 2 percent. What must the expected return on this stock be?
What is your best estimate of the companys cost of equity : Suppose Tom, Ltd. just issued a dividend of $2.00 per share on its common stock. The company’s dividends have been growing at a rate of 7%. If the stock currently sells for $50.00, what is your best estimate of the company’s cost of equity?
Calculate the weighted average cost : Given the following information, calculate the weighted average cost for the Ban Corp.
Part of the integrated world capital market : The U.S. and Great Britain are part of the integrated world capital market. If the expected real rate of return declines significantly in the U.S., explain what will be the impact on interest rates in Great Britain and the U.S.
Find implied forward rate : A one period discount bond is priced at $94.20 per $100 of face value. A two period 6.3% coupon bond is priced at $100.50 per $100 of face value and a 3 period 8.3% coupon bond is priced at $99.75 per $100 of face value. Find implied forward rate 2f1..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the break-even cost per kilowatt-hour

Compact fluorescent lamps (CFLs) have become more popular in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $0.47 and lasts for 1,000 hours. A 15-watt CFL, which provides the same light, costs ..

  Calculate NPV and MIRR of pulley project

When considering including two pieces of equipment, a truck and an overhead pulley system, in this year's capital budget. The projects are independent. The cash outlay for the truck is $17,400, and that for the pulley system is $20,200.

  What is the present value of his inheritance

His recently departed dear Aunt Annie, may she rest in peace, has left Tom a 6-year annuity paying $4,500 per year. He will receive the first payment 4 years from today. If he is discounting at 7% (EAR), what is the present value of his inheritance?

  Assume that amazon has a stock-option plan for top

assume that amazon has a stock-option plan for top management. each stock option represents the right to purchase a

  What is the projects net present value

A construction company is considering an expansion project. So far, they have spent $75,000 investigating the viability of the project and have decided to proceed. The proposed project will cost approximately $450,000 in addition to the $75,000 that ..

  What rate of return are you earning on your money

You've been given the opportunity to invest $100,000. In exchange, you will receive quarterly payments of $5,000 for the next 7 years. What rate of return are you earning on your money? (Your answer should be the annual rate of return expressed as a ..

  Higher operating leverage

In its 2009 annual report, The Coca-Cola Company reported sales of $30.99 billion for fiscal year 2009 and $31.94 billion for fiscal year 2008. The company also reported operating income (roughly equivalent to EBIT) of $8.23 billion in 2009 and $8.45..

  The degree of operating leverage for level of production

The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $84.44. The variable cost per unit is $22.14, Poseidon Swim has average fixed costs per year of $5,685. Determine the degree of operating levera..

  Annualized holding period return

John purchased 100 shares of Black Forest Inc. stock at a price of $153.77 three months ago. He sold all stocks today for $161.14. During this period the stock paid dividends of $4.02 per share. What is John’s annualized holding period return (annual..

  Disbursement account

Which one of the following is a disbursement account into which funds are transferred from a master account only as the funds are needed to cover checks presented for payment?

  Financial strategies, capital budgeting analysis

MBA 612, Financial Strategies, Capital Budgeting Analysis, Word Report and PowerPoint Presentation

  For the average business leader who is not in a finance role

For the average business leader who is not in a finance role, how do risk, return, and the cost of capital impact him or her? How can you synthesize this into the workplace?

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