H6 8) The 10-year Treasury rate, Risk premium and beta are estimated as 8.3%, and 0.3 respectively.Equity cost is estimated to be 4.99% , calculate the risk-free ratea) 3.4%b) 2.5%c) 7.48%d) 1.99%9) If a stock is less riskier than the market, then:a) it will have a beta smaller than one.b) it will have a beta greater than one.c) it will have equity cost greater then risk free investmentsd) The WACC will be greater than one10) You have to formulate the investment problem as LP model where you have 3 alternatives A,B, and C. If A is contingent on C and B. Then the constraint having binary variables (A, B,and C as either 0 or 1) can be formulated as:a) A+C<=Bb) A<=B+Cc) A+B>=Cd) None of the Above

The expected return is the minimum required rate of return which an investor required from the…

Answered: 8) The 10-year Treasury rate, Risk…

8) The 10-year Treasury rate, Risk premium and beta are estimated as 8.3%, and 0.3 respectively. Equity cost is estimated to be 4.99%, calculate the risk-free rate a) 3.4% b) 2.5% c) 7.48% d) 1.99%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Q: i 5 Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs and…

A: Selling price = Manufacturing cost + (Manufacturing cost×20%)

Q: explain me how do you find this amount 2.4869

A: In step 2 of the answer provided, fair value is calculated at the beginning of 8th year to conclude…

Q: 71,000X6 x- 100 12

A: First take out, 78000 x 6/100= 4680

Q: Identify the break-even point in the chart below: a. The yellow point b. None are the break-even…

A: The Break-even point is the level of sales at which Fixed Cost is equal to Contribution. In other…

Q: THE SMITH COMPANY Using the business transactions below, complete T-accounts for the Smith Company.…

A: T Accounts 1. Cash Account Particular Debit Particular Credit To capital A/c…

Q: Can you also complete part 2 and part 3? Also, 50*e^(.04*.5)=51.01 not 51.99

A: Part 2: Expected stock price in 6 months: = 0.6 x $50 x 1.20 + 0.4 x $50 x 0.90 = $57 Expected…

Q: 88 MULTIPLE CHOICE Question 7 Listen What is the inverse of the one-to-one function? A f¹(x) = x-5 3…

A: Step 1: SolutionGiven function: f(x)=3x+5We have to find what is the inverse of the one-to-one…

Q: How will you interpret the following figure? Please address every possible point of information.…

A: Depreciation refers to the decline in the cost of the asset due to normal wear and tear caused by…

Q: sorry I meant answer e4 is coming back incorrect

Q: Please solve:25 / 1.08 * 1 - 1 / 1.08^20 / 1 - 1 / 1.08Thank you

A: In this step we re-write the equation with parantheses

Q: A) The value of A1 is 800 B) The value of A2 is 56.96 C) The Value of the Annuality 800 D)The…

A: The value will be calculated by using the following formula: Value of Annuity =Amount×(+Rate…

Q: What is the binary representation for 13 in decimal? a. 1110 b. 1111 c. 1100 d. 1101

A: Binary representation is a base 2 number system that uses two numbers 0 and 1 to represent a number.…

Q: anually? 120 100 1 3.

A: Annuity refers to constant amount of periodic payments made over a period of time. When the payments…

Q: As interest is recorded on an interest-bearing note, the Interest Expense account is increased; the…

A: The correct option is increased; the Interest Payable account is increased.

Q: Determine the tax liability, marginal tax rate, and average tax rate in each of the following cases.…

A: The marginal tax rate represents the highest tax rate paid by the entity, and The average tax rate…

Q: Bill of exchange are of types 1 type 3 types 2 types 4 types

A: Bill of exchange means an instrument where the drawer draw the bill and after accepted by acceptor ,…

Q: 1(1.25)/1.1+[1(1.25)3/(0.10-0.06)]/1.1 Simply the equation.

A: 1(1.25)/1.1+[1(1.25)3/(0.10-0.06)]/1.1

Q: Solve for i 17,495=299 -1- (1 + i) - 60

A: The present value of annuity depends on the period and interest rate and payment done and these…

Q: 1.02 1.02 1.02 1.02 7T-. .T 1.0200

A: Formula for PV calculation is given below:PV= CF/(1+i)^nBelow is the question asked which is till…

Q: nkkkk

A: We can decide upon the better choice of loan by computing the future value of both the loans. Lower…

Q: ims Corporation uses the weighted-average method in its process costing system. The Assembly…

A: Equivalent units of production is the theoretical number of units of an item that an entity could…

Q: Question 5.00€ vd rwob asog abnod to oulay sud zofduob soole to oulsy stylquada wat 576 251 12979ti…

A: Systematic Risk: Systematic risk, also known as market risk, is the portion of an asset's risk that…

Q: Vhhhbbbbbbbnn

Q: 1 . G i v e t h r e e p o s s i b l e c a u s e s o f a n a d v e r s e d i r e c t…

A: Typically a month or a quarter, a company's cash inflows and outflows are forecasted using the cash…

Q: 9.7 a and b2

A: Depreciation expense is an expense which is charged on fixed assets over the useful years, there are…

Q: that particular year? Take ross income for oil as 22%.

A: Pay as you earn system or tax deduction at source in some countries are the advance tax payment…

Q: x8=h 0817×1= h

A: y= 4x + 180 y= 8x To solve above equations to find the value of x and y

Q: Step by step

A: The formula given in the question is as shown on the whiteboard.

Q: Answer to Part C = 42250

A: Given, Maturity =10 Years Market interest rate: 6% Stated interest rate = 5% Price of the bond is…

Q: Question 6 Listen Which of the following sets represent an intersection, union, subset, and com-…

A: From the Venn diagram :A contains: {2,3,5,7}B contains: {2,4,6,8,10}The universal set S contains:…

Q: Q6/IF F1=A'B'C'E'+ ABDE'+AB'C'E'+ACDE'+A'B'C'E F2= A'B'C+ ADE'+ AB'C'E' F3= B'C'E'+ ABDE'+ A'B'C'E…

A: the equation need to be equated and to check if they are equal to each other.

Q: F 1.15 x e(0.0032 0.0134)×2 F-1.15 x e F _ 1.15 xe 0.0204x2 0.0408

A: e is here is euler's number and has value 2.71828

Q: E12.17

A: Retained earnings refer to the amount earned by the organization till the date of preparation of the…

Q: E12.4

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Q: Carpenter Corporation uses the weighted-average method in its process costing system. This month,…

A: The cost of partially completed work as of the end of the accounting period is what is known as the…

Q: Date Cash Jasmin, Capital Repair Equipment Accounts Payable Shop Supplies Cash Accounts payable Cash…

A: T- Accounts - T-Accounts is the summary of individual ledger accounts. All the journal entries are…

Q: What is the value of (A/P, i, N) if (P/A, i, N) = 7.7721? a. 0.1287 b. 9.7151 c. 6.9949 d: 1.0000,…

A: (P/A,i,N) is the present worth of series of payment. Formula for present worth of series of payment…

Q: Al Fathma LLC manufactures a line of equipinen this year, which also has a one-year quarantee if the…

Q: HOW TO COPY FORMULA FROM RANGE B8:B11 TO RANGE C8:H11?

A: To create and copy a formula using relative references: Select the cell that will contain the…

Q: 18 eBook References A portfolio analyst has been asked to allocate investment funds among three…

A: Portfolio return is calculated as shown below.Portfolio standard deviation is calculated as shown…

Q: 4+1?

A: The calculations are done so that the actual result for which the computation has been done can be…

Q: Hsheue ssjdkd didis

A: Hope it helps :)

Q: Handerson Corporation makes a product with the following standard costs: Standard Quantity or Hours…

A: Variable overhead rate variance: Variable Overhead Rate Variance is the difference between what the…

Q: I asked for S5-6

A: FOB shipping point state that the seller would be liable for the goods until it begin their…

Q: 1. EX.14.01.A 2. EX.14.02 3. EX.14.03 4. EX.14.04 5. EX.14.05.E 6. EX.14.06.E 7. EX.14.07.E 8.…

A: Bonds payable 10% (issued at face value)$1,000,000.00Preferred stock 2 stocks 20…

Question

8) The 10-year Treasury rate, Risk premium and beta are estimated as 8.3%, and 0.3 respectively.
Equity cost is estimated to be 4.99% , calculate the risk-free rate
a) 3.4%
b) 2.5%
c) 7.48%
d) 1.99%
9) If a stock is less riskier than the market, then:
a) it will have a beta smaller than one.
b) it will have a beta greater than one.
c) it will have equity cost greater then risk free investments
d) The WACC will be greater than one
10) You have to formulate the investment problem as LP model where you have 3 alternatives A,
B, and C. If A is contingent on C and B. Then the constraint having binary variables (A, B,
and C as either 0 or 1) can be formulated as:
a) A+C<=B
b) A<=B+C
c) A+B>=C
d) None of the Above

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Q7
un.3
J 7 Choose from list of answer choices and show/explain work.
How to solve:S= 1/1.06[1-1/(1.06)^20]/1-1/1.06
whats happening with question 11 and 12? answer please
E14.7
Code 71046
1 . S u p p o s e t h a t s o m e o n e s t o l e y o u r A T M c a r d a n d w i t h d r e w P 5 0 , 0 0 0 . 0 0 f r o m y o u r c h e c k i n g a c c o u n t . H o w m u c h m o n e y c o u l d y o u l o s e i f y o u r e p o r t e d t h e s t o l e n c a r d t o t h e b a n k : a ) T h e d a y t h e c a r d w a s st o l e n b ) 6 d a y s a f t e r t h e t h e f t c ) 7 5 d a y s a f t e r r e c e i v i n g y o u r p e r i o d i c s t a t e m e n t 2 . Y o u ' r e g e t t i n g m a r r i e d a n d a r e u n h a p p y w i t h y o u r p r e s e n t b a n k . D i s c u s s y o u r s t r a t e g y f o r c h o o s i n g a n e w b a n k a n d o p e n i n g a n a c c o u n t . C o n s i d e r t h e f a c t o r s t h a t a r e i m p o r t a n t t o y o u i n s e l e c t i n g a b a n k - s u c h a s t h e t y p e a n d o w n…
500,00X 500
Explain IAS39
St. ( My The Mic O Mai Mcl O Bus 6 Bad APA Mic Uil • Ben A0 + Do O MA O Wh Ans A mycourses.sgu.edu/access/content/attachment/172d3b94-c459-4b3b-b9da-2cc57a93c3cb/Assignments/d50e87b8-155e-4aa6-845d-9f9986bcaa31/Chp%20... A I Apps A APA citation genera. Grenada SDA Com.. E The Premier Choice. M Gmail YouTube Free, Powerful Engli. O E Planting Calendar. A Maps in Interpretive Simulat. 6 iffer 7-31 Sales Budget A Sendai clothing wholesaler was preparing its sales budget for the first quarter of 20X8. Forecast sales are as follows (All values are in thousands of yen). January ¥203,000 February ¥227,000 March ¥248,000 Sales are 40% cash and 60% on credit. Fifty-five percent of the credit accounts are collected in the month of sale, 35% in the month following the sale, and 10% in the following month. No uncollectible accounts are anticipated. Accounts receivable at the beginning of 20X8 are ¥82,950 (10% of November credit sales of ¥150,000 and 45% of December credit sales of ¥151,000).…
U-s-e- -E-x-h-i-b-i-t- -W-o-r-k-s-h-e-e-t- 6.1. A-n-a-l-y-n- -R-a-m-o-s- -i-s- -e-v-a-l-u-a-t-i-n-g- -h-e-r- -d-e-b-t- -s-a-f-e-t-y- -r-a-t-i-o-.- -H-e-r- -m-o-n-t-h-l-y- -t-a-k-e---h-o-m-e- -p-a-y- -i-s- - ₱166,000.00. E-a-c-h- -m-o-n-t-h-,- -s-h-e- -p-a-y-s- - ₱19,000.00 f-o-r- -a-n- -a-u-t-o- -l-o-a-n-, ₱6,000.00 -o-n- -a- -p-e-r-s-o-n-a-l- -l-i-n-e- -o-f- -c-r-e-d-i--t,-- ₱3,000.00 -o-n -a- -d-e-p-a-r-t-m-e-n-t- -s-t-o-r-e- -c-h-a-r-g-e- -c-a-r-d-,- -a-n-d- ₱4,250.00 -o-n- -h-e-r- --b-a-n-k- -c-r-e--d-i-t- -c-a-r-d-. C-o-m-p-l-e-t-e- -t-h-e- -w-o-r-k-s-h-e-e-t- -b-y- -l-i-s-t-i-n-g- -A-n-a-l-y-n-’-s- -o-u-t-s-t-a-n-d-i-n-g- -d-e-b-t-s-,- -a-n-d- -t-h-e-n- -c-a-l-c-u-l-a-t-e- -h-e-r- -d-e-b-t- -s-a-f-e-t-y- -r-a-t-i-o-.- -G-i-v-e-n- -h-e-r- -c-u-r-r--e-n-t- -t-a-k-e---h-o-m--e -p-a-y-,- -w-h-a-t- -i-s- -t-h-e-- -m-a-x-i-m-u-m- -a-m-o--un-t- -o-f- -m-o-n-t-h-l-y- -d-e-b-t- -p-a-y-m-e-n-t-s- -t-h-a-t- -A-n-a-l-y-n- -c-a-n-- h-a-v-e- -i-f- --s-h-e- -w-a-n-t-s- -h-e-r- -d-e-b-t-…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS