Calculate the required rate for Mudd Enterprises assuming that investers expect a 4.9% rate of inflation in the future. The real vish- free rate is 1.0%, and the market risk premium is 6.0%, Mudd has a beta of 2.7, and its realized rate of retura has averaged 14.07. Over the past 5 years. Rand yar answer to two decimal places.

Calculate the required rate for Mudd Enterprises assuming that investers expect a 4.9% rate of inflation in the future. The real vish- free rate is 1.0%, and the market risk premium is 6.0%, Mudd has a beta of 2.7, and its realized rate of retura has averaged 14.07. Over the past 5 years. Rand yar answer to two decimal places.

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

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If BMWshares are now trading at 50 euros and expectations are that annual dividends into the infinite future are 3 euros what is the required rate of return R assuming that the efficient markets hypothesis (EMH) holds?
Suppose that =7% (na1), and that future short term (1 year) interest rates are expected to be 5% and 3% (for the subsequent two years). The liquidity premium for n2 and 3 is 0.25% and 0.35% respectively. a. Use the liquidity premium theory to calculate for ne2 and 3, and then plot the yield curve using your results. CALCULATE showing all work and ALL formulas that you use, b. Discuss what would be the impact on the yield curve in part a. if future short term rates were suddenly expected to rise.
You are reviewing a five-year monthly return regression of returns for Jamesway Corp, a U.S.-based consumer product company, against the S&P 500. 0.8 ReturnJamesway = 0.25% + 0.80*ReturnS&P 500 (R2 = 25%). The U.S. treasury bond rate is currently 4.75%, the treasury bill rate today is 4.25% and the historical equity risk premium is 4.91%. b. Based upon this regression, estimate the long-term cost of equity in $ currency terms for this company. a. 9.66% b. 7.48% c. 8.68% d. 10.25%
Investors expect a 2.0% rate of inflation in the future. The real risk-free rate is 1.0%, and the market risk premium is 6.0%. Isbell Enterprises has a beta of 1.1. Calculate the required rate of return for Isbell Enterprises. (Answer as a percent with 2 decimal places. For example, 10 percent should be entered as 10.00. Do not use the % sign.)
Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 4.3% rate of inflation in the future. The real risk-free rate is 2.0%, and the market risk premium is 7.0%. Mudd has a beta of 1.2, and its realized rate of return has averaged 12.0% over the past 5 years. Round your answer to two decimal places.
Jersey Jewel Mining has a beta coefficient of 1.5. Currently the risk-free rate is 4 percent and the anticipated return on the market is 6 percent. JJM pays a $5.00 dividend that is growing at 3 percent annually. Do not round intermediate calculations. What is the required return for JJM? Round your answer to two decimal places. % Given the required return, what is the value of the stock? Round your answer to the nearest cent. $ If the stock is selling for $159, what should you do? The stock overvalued and be purchased. If the beta coefficient declines to 1.2, what is the new value of the stock? Round your answer to the nearest cent. $ If the price remains $159, what course of action should you take given the valuation in d? The stock is and be purchased.
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Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 3.4% rate of inflation in the future. The real risk-free rate is 2.0%, and the market risk premium is 6.0%. Mudd has a beta of 1.5, and its realized rate of return has averaged 9.0% over the past 5 years. Round your answer to two decimal places.
You know that the stated rate of return is not what you really earned. If the inflation rate last year was 4.5%, and your investment had a stated rate of 18%, what was your real return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Real return %
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