Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 7.1%. Company $1 Discount Store Everything $5 Forecast return. 14% 13% Standard deviation of returns Beta 16% 18% Company $1 Discount Store Everything $5 Required: What would be the expected rate of return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal places.) Expected Return 1.6 % % 1.0

Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 7.1%. Company $1 Discount Store Everything $5 Forecast return. 14% 13% Standard deviation of returns Beta 16% 18% Company $1 Discount Store Everything $5 Required: What would be the expected rate of return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal places.) Expected Return 1.6 % % 1.0

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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Frontyard Inc has a beta of 0.9. The risk-free rate is 2.5% and the market risk premium is equal to 7%. The company is expected to pay a dividend of $2 per share. The current stock price is equal to $40. Dividends are expected to grow at a constant rate, g a. Calculate the required rate of return r, using the CAPM model The required rate of return r, is equal to b. Calculate the growth rate of dividends g c. Calculate Do Do S d. Calculate Ps De S Ps= S
Consider a position consisting of a $315,380 investment in Oracle Corporation (ORCL) and a $271,440 investment in NVIDIA Corporation (NVDA). Suppose that the daily volatilities of these two assets are 4.14% and 5.71% respectively and that the coefficient of correlation between their return is 0.6778. With an assumption that it follows the normally distributed returns, the 27-day 99% Value at Risk (VaR) for NVIDIA Corporation (NVDA) is closest to A. $187,355.52. B. $157,830.54. C. $124,900.63. D. $100,900.64.
Risk free rate = 5.00%; market return = 11.00%; and beta = 1.05. How much is the firm's cost of equity based on the CAPM? 11.30% 11.64% 11.99% 12.35%
Use the following forecasted financials: (Certain cells were left intentionally blank by asker) You may need to use the CAPM model. Assume beta equals 1.09, the risk-free rate is 1.62%, and the market risk premium is 4.72%. d) Calculate the terminal value and the present value of the terminal value. Assume a long-term growth rate of 3%. e) Calculate Sherwin Williams value per share. The company has 263.3 million shares outstanding.
Dhofar Packaging has a Beta = 1.8. The risk free rate on a treasury bill is currently 3.55% and the market return has averaged 22.85%.Calculate cost of equity Select one: a. 34.77% b. None c. 35% d. 38.29% e. 37.50%
1. Using capital asset pricing model, compute for the cost of equity with risk-free rate of 4%, market return on 8%, beta of 1.5 and tax rate of 30%. 2. With risk-free rate of 5%, beta of 1.5, market return of 8%, prevailing credit spread (rate applied on debt on top of risk-free rate) of 3%, tax rate of 30% and equity ratio of 30%, compute for the weighted average cost of capital. 3. The appropriate WACC of a company is 8%. With risk-free rate of 4%, market return of 10%, prevailing credit spread of 2%, tax rate of 30% and equity ratio of 40%, compute the beta.
Omantel has a Beta = 1.5, the risk free rate on a treasury bill is currently 4.25% and the market return has averaged 18.45%.Calcualte cost of equity. Select one: a. 22.45% b. 25.55% c. 21.45% d. 21.34% e. None
Example The following data were assembled for General Stores Corporation: Equity (Market Risk) Premium: 4.9% Size Premium: 1.8% Value Premium: 3.0% Current Risk-Free Rate: 3.5% Market Beta: 1.05 Size Beta: -0.315 Value Beta: -0.224 Using the data above, estimate General Stores' cost of equity using the Fama- French Model.
Estimate the beta value of your company using CAPM model and check the adequacy of the model (Current US 3 month Treasury bill is 0.03%) Clarity as you have asked: THE RETURNS ARE NOT IN PERCENTAGE. They are just as they are S&P index Iron Inc -2.47567 1.5888 3.433569 1.747917 0.701043 1.115125 0.96953 2.20568 0.409803 0.37909 0.451845 0.842537 -0.01463 0.345743 -0.52576 -0.17227 1.072171 0.201313 0.222197 0.574076 0.759145 1.11301 1.318305 0.592719 -1.41573 -0.19641 0.220289 0.365459 0.137568 0.588253 0.848872 0.389854 -0.78469 0.527053 -0.14562 0.469088 1.554924 1.180992 0.859738 0.977212 0.089864 -1.58603 0.67762 0.901378 0.470848 -0.1895 -0.22245 -0.35259 -0.93571 -0.54436 0.067626 -0.0821 0.070904 -0.35606 1.289025 -1.62177 0.302398 0.139707 -0.26516 -1.5904 1.087871 -0.42531 0.149878…
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Vostan Industries wants to know its cost of equity. The risk-free rate is 5%,the expected return of the market(Erm) is 7%, and Vostan’s equity beta is 1.5. What is Vostan’s cost of equity (Ke) using CAPM approach?
What is the market return if the company's cost of equity is 11.68% and the company has a beta coefficient of 1.8. The expected risk free return is 5.25%

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