What would be the expected return on a stock

Assignment Help Financial Management
Reference no: EM13907229

What would be the expected return on a stock given the following: the rate of return on 1 year CD's is 2%, the return on 90 day T-Bills is 4%, the return on 10 year T-Bonds is 7%, the Prime is 8%, the return on the S&P 500 is expected to be 12%, your stock is considered to be twice as risky as the S&P 500 and the earth is 1 AU from the Sun. (AU = astronomical unit, roughly = to 93 million miles. While that has absolutely nothing to do with this problem, as a college student you should know its stuff!)

Reference no: EM13907229

Questions Cloud

What would be your annualized discount rate : What would be your annualized discount rate % and your annualized investment rate % on the    purchase of a 182-day Treasury bill for $4,925 that pays $5,000 at maturity?
Design a three tier responsibility accounting : Polaris, and Arctic Cat compete across the world in several markets.
Provision of public goods by private market is characterized : The value of an input in its next best use is which of the following? Which of the following is the approach taken to determine how individuals value an option by looking at their actions? The provision of public goods by a private market is characte..
What are the options market value and the price of the stock : The exercise price on one of Flanagan Company's options is $15, its exercise value is $22 and its time value is $5. What are the option's market value and the price of the stock?
What would be the expected return on a stock : What would be the expected return on a stock given the following: the rate of return on 1 year CD's is 2%, the return on 90 day T-Bills is 4%, the return on 10 year T-Bonds is 7%, the Prime is 8%, the return on the S&P 500 is expected to be 12%, your..
What was the beta of this four-stock portfolio : You have invested in 4 stocks: X, Y, Z and fred. X: beta of 1.1 and you invested $10,000 in it; Y: beta of 1.2 and you out $20,000 in it; Z: beta of 0.8 with a $10,000 investment; Fred: beta of 0.9 and a $30,000 investment. What was the beta of this ..
What is the exercise value of the call option : A call option on the stock of Bedrock Boulders has a market price of $7. The stock sells for $30 a share, and the option has a strike price of $25 a share. What is the exercise value of the call option? What is the options time value?
Conventional and non-conventional cash flows : Of the capital budgeting techniques discussed, which works equally well with conventional and non-conventional cash flows and with independent and mutually exclusive project?
How can united by blue use departmental income statements : Brian Linton's company, United By Blue, sells jewelry and apparel.

Reviews

Write a Review

Financial Management Questions & Answers

  Compute the after tax cost of these expenses

Ms. Lincoln, age 51, paid $14,340 of medical expenses this year that were not reimbursed by her insurance provider. Compute the after-tax cost of these expenses assuming that: a. Ms. Lincoln doesn't itemize deductions on her Form 1040. b. Ms. Lincoln..

  Calculate the internal rate of return and profibility index

Fijisawa inc. is considering a major expansion of its product line and has estimated the following cash flows associated with such an expansion. the initial outlay would be $2,010,000 and the project would generate cash flows of $460,000 per year for..

  What are the potential benefits of the domestic securities

What are the potential benefits of the domestic securities market to those investing in the foreign securities market and what are some examples

  Consider the following risk-free t-bill and coupon bonds

Consider the following risk-free T-bill and coupon bonds available for sale in the bond market (annual coupons): Maturity Price Coupon 1 942 T-bill 2 995 6.3% 3 998 7.5% 4 985.25 6.75% a) Your company plans to issue two-year maturity bonds in year tw..

  Analysts expect cash flows and dividends of the firm

Company "A" just paid a $1.30 dividend and analysts expect cash flows and dividends of the firm to grow at 20 percent for the next two years, 15 percent for the following two years and 6 percent annually afterwards. Stocks of this risk have required ..

   ay be defined as a measure of uncertainty in set of

1 the value of a financial asset is the .a present value of all of the future cash flows that will be receivedb sum of

  What will be the opportunity cost of the machine

In your new project, you are going to use a machine which has been put into operation for a couple of years. The original investment on these machines was $120,000 and cumulative depreciation is $80,000. If you sell it at its fair market value now, y..

  Develop a financial analysis

Develop a financial analysis

  Permitted to pay one-third the normal annual payment

A $20,000 loan with interest at 3.5% is being repaid by 35 level annual payments, the firs one due one year hence. Beginning with the 17th payment, the borrower is permitted to pay one-third the normal annual payment. After the 12th reduced payment, ..

  Sales increase

Maggie's Muffins, Inc., generated $2,000,000 in sales during 2013, and its year-end total assets were $1,600,000. Also, at year-end 2013, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..

  Common equity is higher than cost of internal equity

If the cost of new common equity is higher than the cost of internal equity, why would a firm choose to issue new common stock? Explain the difference between WACC and MCC. What determines whether to use the dividend growth model approach or the CAPM..

  Executive compensation or how much hedge fund managers earn

Should we care about executive compensation or how much hedge fund managers earn? How should incentive compensation be changed? Should it be changed? Who can change it? Southwest Airline's CFO hedged fuel prices and saved the company hundreds of mill..

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