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Please do a and b separate (Question 2) a) Plot the Security Market Line (SML)b) Superimpose the CAPM’s required return on the SMLc) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph.

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What is the appropriate required return of CSB on this financial accounting question?

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​(Capital asset pricing​ model)  Grace Corporation is considering the following investments. The current rate on Treasury bills is 2.5 percent and the expected return for the market is 9 percent.   Stock Beta K 1.06 G 1.28 B 0.78 U 0.93   ​(Click on the icon    in order to copy its contents into a spreadsheet.​)   a.  Using the​ CAPM, what rates of return should Grace require for each individual​ security? b.  How would your evaluation of the expected rates of return for Grace change if the​ risk-free rate were to rise to 4 percent and the market risk premium were to be only 6 ​percent? c.  Which market risk premium scenario​ (from part a or b​) best fits a recessionary​ environment? A period of economic​ expansion? Explain your response.       Question content area bottom Part 1 a.  The expected rate of return for security​ K, which has a beta of 1.06​, is enter your response here​%. ​(Round to two decimal​ places.) Part 2 The expected rate…

B Use the following information to answer the question(s) below. Nielson Motors has a debt-equity ratio of 1.6, an equity beta of 1.6, and a debt beta of 0.5. It is currently evaluating the following projects, none of which would change Nielson's volatility. Project 1 Investment 100 NPV 23 4 5 2 3 75 120 60 80 12 18 15 14 (All amounts are in Smillions.) The total debt overhang associated with accepting project 1 is closest to ($ million) (2 decimal places):

Venture Finance: Given the exit equation (Series A) = C (12) - C (15) + 1/2 * C (24) - 1/6 * C (46). What are inputs to calculate the exit equation

A firm is considering three different financing alternatives: debt, preferred stock, and common equity. an EBIT-EPS chart that shows several indifference points. What does each indifference point show the firm   O a. The level of EBIT that generates identical EPS under two alternative financing plans   O b. The level of sales that generates identical EBIT and EPS figures   O c. It shows the level of EBIT and EPS at which DFL is identical under two alternative financing   Od. The level of EBIT that generates different EPS under two alternative financing plans

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Please fill in the parts that are shaded in yellow. Show manual working only, No spreadsheet computation is allowed.

Calculate the issue price

Estimate the weighted-average cost of capital for Home Depot (HD), Altria (MO), Caterpillar (CAT), and Intel (INTC). You can estimate the expected stock returns for these companies by using the betas shown on finance.yahoo.com. You can also use Yahoo! Finance to find the relative proportions of equity and debt for each company. Remember, though, to use the mar- ket value of the equity, not its book value. Finding the yield on the debt is a little trickier. One possibility it to log on to the Federal Reserve Bank of St. Louis site at https://fred.stlouisfed .org/ to find the current level of Treasury yields and the yield spreads (i.e., the extra yield for bonds with different ratings). An alternative is to view recent transactions at www.finra.org /industry/trace/corporate-bond-data. Note: As we write this, Moody's provides an A rating for all four companies.

. Using the information in the table below, answer calculate the following:   Which company demonstrates the worst leverage ratio? Explain what it depicts.         Which company demonstrates the strongest interest coverage ratio? Explain what it depicts.   Walmart Inc Target Corp Home Depot Inc/The Lowe's Cos Inc CVS Health Corp   2020 Q2 2020 Q2 2020 Q2 2020 Q2 2020 Q2 Revenue 518 76.8 110 71.8 226.8 EBI TDA 33.7 7 18.3 6.1 14.2 EBI TDA Margin 6% 9% 17% 8% 6%             Net Income 12.8 3.2 11.2 2.5 4.3 Return on Capital 11.1 14.1 39.6 13 4.9 Credit Metrics(x)           Debt/EBI TDA 2 1.9 1.8 3.4 5.9 EBI TDA/Interest 14 16.2 18.7 16 6.6 FCF Coverage 7.7 14.6 11.1 6.2 6.2 Free Cash Flow to Total Debt 0.3 0.2 0.3 0.2 0.1

Warner Bros. CEO Ultimately what does a forecast scenario consist of? Michael Estimated NPV based on projected cash flows Correct Fill in the blank: Scenario analysis is made up of several Correct Michael Scenarios Michael We have created various scenarios each with a forecast for our expected sales volume, revenues, expenses, risks, etc. At a high level, here are how each of the scenarios looks like. Calculate NPV for Scenario A. Use the information provided on the right. Round to the nearest whole number. Materials on the right have been updated >> Enter a response then click Submit below $0 Scenario Comparison ($) Initial Investment Scenario A Scenario B Scenario C Expected interest rate: 12% Forecasting period: 5 years PV annuity factor: 3.6048 2,000,000 2,000,000 2,000,000 Annual Net Income 545, 100 426,995 1,644, 385 Annual Cash Flow 679, 015 -493,005 2,564, 385 NPV -3,777, 184 7,244,095

Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here O in order to copy the contents of the data table below into a spreadsheet.) ne Risk-free Market rate, R return, rm Beta, b nts 4% 0.7 1% The required return for the asset is %. (Round to two decimal places.) eТext edia Librai ial Calculat er Resource Enter your answer in the answer box and then click Check Answer. Check Answer mic Study ules Clear All All parts showing 10: DExercise(14); ools > This course (Introduction to Finance (FIN-101-D02) Distance Spring 2021) is hased on Zutter/Smart Princinles of Managerial Finance Rrief Re 4/13 O Type here to search insert

Using the data generated in the attached picture: Plot the Security Market Line (SML)  Superimpose the CAPM’s required return on the SML Indicate which investments will plot on, above and below the SML? If an investment’s expected return (mean return) does not plot on the SML, what does it show? Identify undervalued/overvalued investments from the graph.