An all equity financed company is considering an independent project with an internal rate of return (IRR) of 11%. Assume the market risk premium is 6% and risk free rate is 3%. The beta of the company's stock is 1.4. Using the Capital Asset Pricing Model (CAPM), the company should accept this project.   Question  options:   a) True   b) False

An all-equity firm is considering the projects shown below.  The T-bill rate is 4 percent and the market risk premium is 7 percent.  If the firm uses its current WACC of 12 percent to evaluate the projects, which project(s), if any, will be incorrectly accepted?   Expected Return Beta Project A 8.0% 0.5 Project B 19.0% 1.2 Project C 13.0% 1.4 Project D 17.0% 1.6

Piedmont Hotels is an all-equity company. Its stock has a beta of 1.33. The market risk premium is 7.4 percent and the risk-free rate is 3.2 percent. The company is considering a project that it considers riskier than its current operations so it wants to apply an adjustment of 2.4 percent to the project's discount rate. What should the firm set as the required rate of return for the project?

The​ risk-free rate is currently 3.3​%, and the market return is 14.8​%. Assume you are considering the following​ investments: Investment Beta A 1.54 B 1.16 C 0.51 D 0.11 E 2.14 . a. Which investment is most​ risky? Least​ risky? b. Use the capital asset pricing model​ (CAPM) to find the required return on each of the investments. c. Find the security market line​ (SML), using your findings in part b. d. On the basis of your findings in part c​, what relationship exists between risk and​ return? Explain.

An all-equity firm has a beta of 1.2. The firm is evaluating a project that will increase the output of the firm's existing products. The market risk premium is 6.5 percent and the risk-free rate is 3.5 percent. What discount rate should be assigned to this expansion project?

Hastings Entertainment has a beta of 0.65. If the market return is expected to be 11% and the risk-free rate is 4%, what is Hastings' required return? Use the capital asset pricing model.

Use the basic equation for the capital asset pricing model (CAPM) to work each of the following problems. a. Find the required return for an asset with a beta of 1.63 when the risk-free rate and market return are 5% and 13%, respectively. b. Find the risk-free rate for a firm witha required return of 14.363% and a beta of 1.07 when the market return is 14%. C. Find the market return for an asset with a required return of 9.045% and a beta of 1.57 when the risk-free rate is 3%. d. Find the beta for an asset with a required return of 10.255% when the risk-free rate and market return are 6% and 9.7%, respectively. a. The required return for an asset with a beta of 1.63 when the risk-free rate and market return are 5% and 13%, respectively, is %.

​(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…

(Capital Asset Pricing​ Model)  The expected return for the general market is 10.5 ​percent, and the risk premium in the market is 6.8 percent. ​ Tasaco, LBM, and Exxos have betas of 0.809​, 0.677​, and 0.578​, respectively. What are the appropriate expected rates of return for the three​ securities?       Question content area bottom Part 1 The appropriate expected return of Tasaco is enter your response here​%. ​(Round to two decimal​ places.) Part 2 The appropriate expected return of LBM is enter your response here​%. ​(Round to two decimal​ places.) Part 3 The appropriate expected return of Exxos is enter your response here​%. ​(Round to two decimal​ places.)

QUESTIONS: 1) Assuming that the risk-free rate of return is currently 3,2%, the market risk premium is 6% whereas the beta of HelloFresh SH. stock is 1.8, compute the required rate of return using CAPM. 2) Compute the value of each investment based on your required rate of return and interpret the results comparing with the market values. 3) Which investment would you select? Explain why using appropriate financial jargon (language). 4) Assume HelloFresh SH's CFO Mr. Christian Gaertner expects an earnings upturn resulting increase in growth (rate) of 1%. How does this affect your answers to Question 2 and 3? 5) AACSB Critical Thinking Questions: A) Companies pay rating agencies such as Moody's and S&P to rate their bonds, and the costs can be substantial. However, companies are not required to have their bonds rated in the first place; doing so is strictly voluntary. Why do you think they do it? (Textbook page: 198) B) What are the difficulties in using the PE ratio to value stock?…