Question 32 (1 point) Wampa Inc. has an expected return of 10% and
a beta of...
Question 32 (1 point) Wampa Inc. has an expected return of 10% and
a beta of 2.80. The risk-free rate is 1%. What is the EXPECTED
RETURN ON THE MARKET?
Question 33 (1 point) Sith Inc. offers a zero-coupon bond that
has 10 years to maturity and the yield-to- maturity of similar
bonds is 2%. What is the market price of Sith Inc's bond?
Question 34 (1 point) A Chicago, Illinois municipal bond has a
maturity date in 20 years, offers a 3% coupon rate, and is
currently priced at $ 990. If bond investors face a average tax
rate of 15%, what would the yield be on a corporate bond with
similar characteristics?
Question 35 (1 point) Count Inc. just paid a dividend of $
20.20. Dividends are expected to grow at 4% and the current price
of Count Inc. stock is $ 350. What is the required rate of return
of Count inc. stock?
Solutions
Expert Solution
Dear Reader
The question tested various concept. It is ideal question to
refer a day before exams.
Question 3 BHP Ltd has a beta of 0.765, if the
expected return of the market is 11.5% and the risk-free rate is
7.5%. Required: a) What is the appropriate required return of BHP
Ltd? b) What does a beta coefficient measure? Define
beta. c) What is the fundamental motivation behind
portfolio theory? That is, what are people trying to achieve by
investing in portfolios of securities rather than in a few
individual shares or debentures?
Question 38 (1 point) What is the beta of Tauntaun Corp. if it has
an expected return of 10%, the yield on a Treasury Bill is 2.00%,
and the expected return on the market is 8.00%?
Question 39 (1 point) Fortuna Inc. will pay a dividend of $ 4
next year. Dividends are expected to grow at 3% after next year's
dividend. The required rate of return for similar stocks is 7%.
What is the current value of Fortuna Inc....
Stock A has a beta of 1.5 and an expected return of 10%. Stock B
has a beta of 1.1 and an expected return of 8%. The current market
price for stock A is $20 and the current market price for stock B
is $30. The expected return for the market is 7.5%. (assume the
risk free asset is a T-bill).
8- What is the risk free rate?
A) 0.25%
B) 1.25%
C) 2.00%
D) 2.50%
E) None of the...
Chance Inc's stock has an expected
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(a) what is the
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(b) What is the
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A stock has a beta of 1.5. The market's expected total return is
10% pa and the risk free rate is 5% pa, both given as effective
annual rates. In the last 5 minutes, bad economic news was released
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market fell by 1%. The risk free rate was unchanged. What do you
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given as an effective 5 minute...
A stock has a beta of 0.6 and an expected return of 10 percent.
A risk-free asset currently earns 4.1 percent.
a. What is the expected return on a portfolio
that is equally invested in the two assets? (Do not round
intermediate calculations. Enter your answer as a percent rounded
to 2 decimal places.)
b. If a portfolio of the two assets has a beta
of 0.57, what are the portfolio weights? (Do not round
intermediate calculations. Enter your answers...
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expected return on the market is 0.1. What must the risk-free rate
be? (Hint: Use CAPM) Enter the answer in 4 decimals e.g.
0.0123.
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rate be? (Hint: Use CAPM) Enter the answer in 4 decimals e.g.
0.0123.
You own a portfolio equally invested in a risk-free asset and
two stocks (If one of the stocks has a beta of 1 and the total
portfolio is equally as risky as the market, what must the beta be
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