User Account

All Pages

What the capital asset pricing model of each stock

Assignment Help Accounting Basics
Reference no: EM133187702

Question - Private Limited is an all equity financed company with a cost of capital of 18.5% per annum. The firm faces a risk-free rate of return of 8% per annum and an expected average market portfolio return of 15% per annum.  It is considering the following stocks available on the domestic financial market of operation:

Stock

Projected funds to be invested in the stock ($000)

Expected Market  Value of the Stock in 1 Year ($000)

Beta Coefficient

A

1000

1095

0.20

B

1000

1115

0.40

C

1500

1780

1.00

D

2000

2385

1.50

E

2000

2400

2.00

Required -

a) What the firm's beta co-efficient and interpret it.

b) What the capital asset pricing model (CAPM) of each stock?

c) What the expected rate of return for each stock?

d) What the over, under and correctly valued stocks?

Reference no: EM133187702

Questions Cloud

What is the price and modified duration of a perpetuity bond : Question - What is the price and modified duration of a perpetuity bond with a semi-annual $100 coupon. Given that YTM is 6%
Changes in business management environment : What are the changes in business management environment in Asian region due to pandemic Covid-19
How much does dolittle and dalley include as cash paid : The remaining amount will be paid in the following month. How much does Dolittle and Dalley include as cash paid for inventory in February
Confirming the feedback provided : Send an email to your assessor You should reflect on the feedback provided and send an email to your assessor confirming the feedback provided, as well as how y
What the capital asset pricing model of each stock : Private Limited is an all equity financed company with a cost of capital of 18.5% per annum. What the capital asset pricing model (CAPM) of each stock
Sylvain beauchamp lives in ottawa and works for an ontario : Sylvain Beauchamp lives in Ottawa and works for an Ontario retailer with stores in Ottawa, Kingston, and Hull, PQ. His standard work week has him working 8 hour
Discuss the circumstances of the incident : Locate a news article about an organization who experienced an ethical issue related to communication.
Need and opportunities for waged workers : The topic of the argument: "Mechanization (for example robotics) does not in itself reduce the need and opportunities for waged workers."
Interesting aspects of the business : The idea behind putting together a business plan is to enable owners to have a more defined picture of potential costs and drawbacks to certain business decisio

Reviews

Write a Review

Accounting Basics Questions & Answers

  Compute the cost of goods destroyed

Zidek Corp. requires an estimate of the cost of goods lost by fire on March 9. Compute the cost of goods destroyed

  What is the budgeted total manufacturing overhead for year

Jordan and Taylor are too busy baking brownies to schedule an appointment with you. What is the budgeted total manufacturing overhead for the year

  Prepare a journal entry to record depletion during the year

Salter Mining Company purchased the Northern Tier Mine for $21 million cash. Prepare a journal entry to record depletion during the year

  Why is understanding actual and budgeted costing as well as

why is understanding actual and budgeted costing as well as direct and indirect costs important for non-profit

  Prepare the necessary December adjusting journal entry

Prepare the necessary December 31, 2014, adjusting journal entry to record depreciation assuming Delta uses: (a) The straight-line method of depreciation

  How much of the total setup costs would be allocated

If the setup costs are allocated using direct labor hours, how much of the total setup costs would be allocated to boat trailers

  Compute the total manufacturing costs incurred

Cost of Goods Manufactured was $605,000. Use this information to compute the total manufacturing costs incurred during the fiscal year 2018

  Compute sheridan company accounts receivable turnover

In 2022, Sheridan Company has net credit sales of $1,692,000 for the year. Compute Sheridan Company's accounts receivable turnover

  Determine the company should buy the new machine

Santana Inc. manufactures widgets. Determine whether the company should buy the new machine or outsource production of C1. quantitative analysis

  Depreciation methods mike davis enterprises purchased a

depreciation methods. mike davis enterprises purchased a delivery van for 40000 in january 20x7. the van was estimated

  Madison and christopher are staff accountants at a major

madison and christopher are staff accountants at a major public accounting firm. both are pursuing a law degree in a

  Explain how gains or losses on impaired assets

Explain how gains or losses on impaired assets should be reported in income.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd