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CAPM AND PORTFOLIO RETURN
You have been managing a $5 million portfolio that has a beta of 1.75 and a required rate of return of 14%. The current risk-free rate is 6.25%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 1.60, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places.
The MACRS table values .2000, .3200, .1920, .1152, .1152, and .0576 for Years 1 to 6, respectively. What is the current book value of these assets?
You purchased a zero coupon bond one year ago for $102.86. The market interest rate is now 8 percent. what was your total return for the past year?
You are evaluating the balance sheet for Campus Corporation. What is Campus's net working capital?
Harris Company must set its investment and dividend policies for the coming year.
Percy Motors has a target capital structure of 30% debt and 70% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 11%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 14.30%...
The Impact of Marking to Market and Margin Requirements on Futures Investments. Suppose an investor has a $1 million long position in T-bond futures.
A larger bid-ask spread means that the dealer will realize a lower profit. The efficient markets hypothesis assumes that all investors are rational.
A firm utilizes a strategy of capital rationing, which is currently $375,000 and is considering the following two projects:
Without solving this internal rate problem, do you think the marginal cost you would find would be greater or less than 9 percent? Why?
Why is Cost of Capital important in Corporations? Explain. In your own words,summarize the CFO’s qualifications.
What is the NPV of the investment when the cost of capital is 5%? 10%? What is the payback period on this investment?
Regal Industries has the following capital structure. Its corporate tax rate is 35%. Regal is evaluating a project costing $58,000 which will generate $15,000 for 6 years. It will require an increase of $2,000 in NWC at the outset, but no recapture. ..
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