gan's Pumpkins Co. is a distributor of excellent specialty pumpkins. In fact, the firm's spokesperson describes them as smashing! What is Corgan's required ected) return if its beta is 2.2, the risk-free rate is 4.9%, and the expected return on the market portfolio is 10.5%. Assume the CAPM/SML is correct. ENTE R ANSWER AS A PERCENTAGE WITH ONE DECIMAL PLACE AND NO % SIGN (e.g., if your answer is 5.2%, enter 5.2).

gan's Pumpkins Co. is a distributor of excellent specialty pumpkins. In fact, the firm's spokesperson describes them as smashing! What is Corgan's required ected) return if its beta is 2.2, the risk-free rate is 4.9%, and the expected return on the market portfolio is 10.5%. Assume the CAPM/SML is correct. ENTE R ANSWER AS A PERCENTAGE WITH ONE DECIMAL PLACE AND NO % SIGN (e.g., if your answer is 5.2%, enter 5.2).

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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Exercise 7-4 (Algo) Intercompany Services LO 7-1, 7-2 Power Corporation owns 75 percent of Swift Company's stock. Swift provides health care services to its employees and those of Power. During 20X2, Power recorded $41,500 as health care expense for medical care given to its employees by Swift. Swift's costs incurred in providing the services to Power were $34,500. Note: Leave no cells blank, enter "0" wherever required. Required: a. By what amount will consolidated net income change when the intercompany services are eliminated in preparing Power's consolidated statements for 20X2? Consolidated net income change b. What would be the impact of eliminating the intercompany services on consolidated net income if Power owned 100 percent of Swift's stock rather than 75 percent? impact of eliminating the intercompany services c. If in its consolidated income statement for 20X2 Power had reported total health care costs of $74,000, what was the cost to Swift of providing health care services…
Suppose that the borrowing rate that your client faces is 8% Assume that the equity market index has an expected return of 12% and standard deviation of 28%, that ry - What is the range of risk aversion for which a client will neither borrow nor lend, that is, for which y-1? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. y=1 for SAS
Zacher Co.'s stock has a beta of 1.28, the risk-free rate is 4.25%, and the market risk premium is 5.50%. What is the firm's required rate of return? Select the correct answer. a. 10.09% b. 10.49% c. 11.29% d. 10.89% e. 11.69%
Quantitative Problem: You are given the following information for Wine and Cork Enterprises (WCE): rRF = 4%; rM = 9%; RPM = 5%, and beta = 1 What is WCE's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. ? % If inflation increases by 1% but there is no change in investors' risk aversion, what is WCE's required rate of return now? Do not round intermediate calculations. Round your answer to two decimal places. ? % Assume now that there is no change in inflation, but risk aversion increases by 2%. What is WCE's required rate of return now? Do not round intermediate calculations. Round your answer to two decimal places. ? % If inflation increases by 1% and risk aversion increases by 2%, what is WCE's required rate of return now? Do not round intermediate calculations. Round your answer to two decimal places. ? %
JaiLai Cos. stock has a beta of 0.6, the current risk-free rate is 6.0 percent, and the expected return on the market is 10 percent.What is JaiLai’s cost of equity? (Round your answer to 2 decimal places.)
You have assigned the following values to these three firms: Upcoming Dividend $0.50 Estee Lauder Kimco Realty Nordstrom Price $36.00 75.00 11.00 1.58 2.00 Estee Lauder required return Kimco Realty required return Nordstrom required return Assume that the market portfolio will earn 17.20 percent and the risk-free rate is 8.20 percent. Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your final answers to 2 decimal places.) CAPM Growth 11.40% 17.00 8.80 % % % Beta 0.92 1.28 1.24 Constant-Growth Model % % %
Kaiser Aluminum has a beta of 0.70. If the risk-free rate (Res) is 5.0%, and the market risk premium (RPM) is 7.4%, what is the firm's cost of equity from retained earnings based on the CAPM? Your answer should be between 8.70 and 11.25, rounded to 2 decimal places, with no special characters.
Suppose there are two independent economic factors, M₁ and M₂. The risk-free rate is 6%, and all stocks have independent firm- specific components with a standard deviation of 46%. Portfolios A and B are both well diversified. Portfolio A Beta on M₁ 1.5 2.0 Beta on My 2.1 -0.6 Required: What is the expected return-beta relationship in this economy? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected return-beta relationship E(rp) = Expected Return (%) 36 14 45 60 Answer is not complete. Bp1 Bp2
Assume that the risk-free rate is 2.5% and the market risk premium is 8%. What is the required return for the overall stock market? Round your answer to one decimal place. ? % What is the required rate of return on a stock with a beta of 0.5? Round your answer to one decimal place. ? % The above is a two part question, therefore the second answer is determined based off the first answer provided. Please, please, please do provide both answers.
The estimated beta for Caterpillar Inc. is 135. The risk free rate of return is 3 percent and the Equity Risk Premium is 4 percent. What is the required rate of return for CAT using the CAPM? Group of answer choices 8.4% 12.3% 15.29% 10.1%
Suppose the common stock of United Industries has a beta of 0.83 and an expected return of 8.7 percent. The risk-free rate of return is 3.4 percent while the inflation rate is 2.8 percent. What is the expected market risk premium? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Crimson Co. has a beta equal to 1.29 and a required return of 0.147 based on the CAPM. If the market risk premium is 0.041, the risk-free rate of return is Instruction: Type your answer as a decimal, and round to three decimal places

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