have Analysts are projecting that Capital Railways will earnings per share of $4.20. If the average industry P/E ratio is 22, what is the current price of Capital Railways?
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What is the current price of capital railways?
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- Analysts are projecting that Capital Railways will have earnings per share of $4.20. If the average industry P/E ratio is 22, what is the current price of Capital Railways?Calculate the union’s cost of equity from the CAPM using its own beta (0.90) estimate and the industry beta (1.25) estimate. How different are your answers? Assume a risk-free rate of 2% and a market risk premium of 7%. Can you be confident that Union Pacific’s true beta is not the industry average?5) Which of the following will cause a movement from one point on an AD curve to another point on the same AD curve? a) a change in government expenditures b) a change in the price level c) a change in net exports d) all of the options provided 6) Here is a consumption function: C = CO + MPC(Yd). If MPC is 0.80, then we know that a) as Co rises by $0.80, Yd rises by $1. b) Yd rises by $0.80. c) as Yd rises by $1. Co rises by $0.80. d) as Yd rises by $1, C rises by $0.80. 7) An aggregate demand (AD) curve shows the a) none of the options provided is correct b) quantity of output that people are willing and can afford to buy at different price levels, ceteris paribus c) quantity of output that people are willing as well as able to produce and sell at different price levels, ceteris paribus. d) value of a particular good that people are willing and able to buy at a particular price, ceteris paribus. d) value of a particular good that people are willing and able to buy at a particular…
- a. Given the following information, calculate the expected value for Firm C’s EPS. Datafor Firms A and B are as follows: E(EPSA) =$5.10, σA =$3.61, E(EPSB) =$4.20, and σB = $2.96. b. You are given that σC = $4.11. Discuss the relative riskiness of the three firms’ earnings.Starting with management’s NOPAT projections in case Exhibit 17, what do you estimate as the free cash flows for 2010 through 2015? How do these cash flows compare with those based on the market scenario given in case Exhibit 18? Assuming a discount rate of 7.0% for large pharmaceutical companies, what do you estimate as Genzyme’s intrinsic market value for the management scenario? The market scenario? Please express your estimates as both an enterprise value and as a price per share. Be prepared to discuss and defend the key assumptions you made in your analysis. Exhibit 17 SANOFI-AVENTIS’S TENDER OFFER FOR GENZYME Genzyme—Financial Forecasts (Management Scenario) in Millions of U.S. Dollars Projected 2009 2010 2011 2012 2013 2014 2015 Revenue Sources Personalized Genetic Health $1,850.0 $1,757.5 $2,284.8 $2,513.2 $3,015.9 $3,468.3 $3,815.1 % Growth -5% 30% 10% 20% 15% 10% Renal…Current Ratio Explain what it means for a firm to have a current ratio equal to .50. Would the firm be better off it the current ratio where 1.50? What if it were 15.0? Explain your answers.
- Imagine that you have been given a job as an economic advisor to evaluate a certain competitive US manufacturing industry. Your (accurate) statistical analysis indicates the market is characterized by demand of Qd = 300 – 3P and supply of Qs = 2P – 50. > Solve for equilibrium price P1 and quantity Q1. > Depict the supply curve S1 and demand curve D1 on the usual P, Q diagram. Label all relevant intercepts (including two intercepts for the demand curve and one intercept for the supply curve). Clearly indicate and label the market equilibrium. > Graphically indicate the areas of Consumer Surplus (CS1) and Producer Surplus (PS1). > Compute the values of Consumer Surplus (CS1) and Producer Surplus (PS1), clearly indicating the units that CS and PS are measured in. Continuing your analysis of the competitive US manufacturing industry from Question 1, with demand of Qd = 300 – 3P and supply of Qs = 2P – 50, suppose an increase in labor costs causes the supply curve to decrease,…The Beta coefficients of TSLA and JPM are 1.99 and 1.18 respectively. What does Beta measure and how is it interpreted? Explain the beta values of TSLA and JPM by providing a calculated example of how they relate to market returns.Suppose that you have the following utility function: U=E(r) – ½ Aσ2 and A=3 Suppose that you have $10 million to invest for one year and you want to invest that money into ETFs tracking the S&P 500 (US) and S&P/TSX 60 (Canada) index, which are often used as proxies for the US and Canadian stock markets, respectively, and the Canadian one-year T-bill. Assume that the interest rate of the one-year T-bill is 0.35% per annum. You have found two ETFs that you are interested in. From a set of their historical data between 2001 and 2019, you have estimated the annual expected returns, standard deviations, and covariance as follows: ETFUS : E(r)= 0.070584 0.173687 ETFCDA : E(r)= 0.073763 0.16816 Covariance between ETFUS and ETFCDA = 0.02397 Answer the following questions using Excel: What is the optimal portfolio of ETFUS and ETFCDA? Also submit an Excel file to show your work.
- Suppose that you have the following utility function: U=E(r) – ½ Aσ2 and A=3 Suppose that you have $10 million to invest for one year and you want to invest that money into ETFs tracking the S&P 500 (US) and S&P/TSX 60 (Canada) index, which are often used as proxies for the US and Canadian stock markets, respectively, and the Canadian one-year T-bill. Assume that the interest rate of the one-year T-bill is 0.35% per annum. You have found two ETFs that you are interested in. From a set of their historical data between 2001 and 2019, you have estimated the annual expected returns, standard deviations, and covariance as follows: ETFUS : E(r)= 0.070584 0.173687 ETFCDA : E(r)= 0.073763 0.16816 Covariance between ETFUS and ETFCDA = 0.02397 Answer the following questions using Excel: Draw the opportunity set offered by these two securities (with increments of 0.01 in weight). Hint: In Excel, calculate the portfolio expected return and…Suppose that you have the following utility function: U=E(r) – ½ Aσ2 and A=3 Suppose that you have $10 million to invest for one year and you want to invest that money into ETFs tracking the S&P 500 (US) and S&P/TSX 60 (Canada) index, which are often used as proxies for the US and Canadian stock markets, respectively, and the Canadian one-year T-bill. Assume that the interest rate of the one-year T-bill is 0.35% per annum. You have found two ETFs that you are interested in. From a set of their historical data between 2001 and 2019, you have estimated the annual expected returns, standard deviations, and covariance as follows: ETFUS : E(r)= 0.070584 0.173687 ETFCDA : E(r)= 0.073763 0.16816 Covariance between ETFUS and ETFCDA = 0.02397 Answer the following questions using Excel: Determine your optimal asset allocation among ETFUS , ETFCDA , and T-bill, in percentage and in dollar amounts. Also submit an Excel file to show your…Consider the following information about the various states of economy and the returns of various investment alternatives for each scenario. Answer the questions that follow. % Return on T-Bills, Stocks and Market Index States of Economy Probability T-Bills Phillips Pay-up Rubber-Made Market Index Recession 0.2 7 -22 28 10 -13 Below Average 0.1 7 -2 14.7 -10 1 Average 0.3 7 20 0 7 15 Above Average 0.3 7 35 -10 45 29 Boom 0.1 7 50 -20 30 43 Mean Variance (%) ^2 Standard Deviation Coefficient of Variation Covariance wit MP Correlation with Market Index Beta CAPM Req. Return Valuation ( Overvalued / Undervalued/Fairly Valued) Nature of Stock…