answer options:10.05%8.67%9.13%10.30%9.68% National Home Rentals has a beta of 1.06, a stock price of $17, and recently paid an annual dividend of $.92 per share. The dividendgrowth rate is 2.2 percent. The market has a rate of return of 11.2 percent and a risk premium of 7.3 percent. What is the estimated cost ofequity using the average return of the CAPM and the dividend discount model?

COST OF EQUITY Shareholders will invest their funds with the expectation of dividends. The market…

Answered: National Home Rentals has a beta of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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D13 Write down which options to long or short, and how many numbers of contracts of each option do you need to long or short to construct the pay off as follows:
FIGURE 4.44 A B 0.27 A2 0.73 0.45 0.55 Al (0.5) $8 $0 (0.5) $15 $4 $10 $0 Ⓒ Cengage Leaming > 4.9 Create risk profiles and cumulative risk profiles for all possible strate- gies in Figure 4.44. Is one strategy stochastically dominant? Explain. 4
QUESTION 5 Date 01/02/01 01/03/01 1 Mo 01/04/01 3 Mo N/A N/A N/A 6 Mo 1 Yr 5.11 5.58 5.44 5.20 5.87 4.82 4.92 5.69 4.92 5.14 5.37 4.78 5.03 Look at the yields for 01/02/01 in the above table. Which of the following best describes the shape of the yield curve at that time? O A. Inverted O B. Normal C. Flat D. Upward-Sloping 5.04 2 Yr 4.82 3 Yr 4.87 4.92 4.77 5 Yr 7 Yr 4.97 5.18 5.07 4.76 4.94 4.82 10 Yr
Yields Year TLS DI PFE WMT 20x5 12.00% 4.50% 5.80% 11.30% 20x6 13.30% 5.30% 5.70% 9.00% 20x7 10.20% 3.10% 5.90% 13.90% 20x8 9.30% 2.70% 4.50% 14.80% 20x9 8.60% 1.90% 6.30% 15.00% Correlations: CPP = Perfect positive correlation, CP = Perfect correlation, SC = No correlation, CN =Negative correlation, CPN = Perfect negative correlation TLS – DI= 0.996145099 = (CPP) DI – PFE= 0.005359947 = (SC) TLS – PFE= 0.08450695 = (CP) DI – WMT= -0.975050934 = (CPN) TLS – WMT= -0.986408221 = (CPN) PFE – WMT= -0.144303856 = (CN) b. Which three of the four stocks would you combine to build a diversified portfolio and why? It starts from the premise that there is an investment distribution in equal parts (33.3%) among the selected shares. c. Calculate the return, risk and coefficient of variation for the portfolio of three stocks selected in the previous exercise. It starts from the premise that there is an…
Use the information below to answer the question 52WH 52WLo Ticker Div Yield % P/E Vol 00s High Low Close Net Chg 52.53 28.31 KO 0.65 1.34 13.80 6,412 54.12 32.50? -0.81 What was the previous day's closing price? O $51.32 O $48.74 O $50.10 O $49.32
Finance
M
Based on the following table. Bid Ask EURUSD 1M FWD 7.05 7.34 EURUSD 2M FWD 14.99 15.15 EURUSD 3M FWD 22.57 23.05 EURUSD 4M FWD 30.25 30.55 EURUSD 5M FWD 38.03 38.43 EURUSD 6M FWD 45.91 47.2 EUR/USD Spot 1.1320 1.1328 What is the average annualized forward premium/discount for the EUR if you use the 4M forward contract (Format for answer: X.XX% or –X.XX%)
QUESTION 16 If D1=$5.00, rs-10%, and g = -3%, would anyone buy the stock? If so, at what price?
Option A В -А C-B C-A -4500 -7500 -9000 -3000 -1500 -4500 1500 3000 3400 1500 400 1900 2. 2000 3000 3740 1000 740 1740 3 2500 3000 4114 50 1114 1614 8/C or AB/C 0.91 1.18 1.07 1.11 1.31 1.04 Your accountant has provided you with the table below comparing three alternatives using benefit-cost ratio analysis and an MARR of 6%, the best option is: Option A Option B O Option C There is not enough information provided. Year
Calculate the beta of security E with the S&P. B, % -3.76 21.67 19.84 13.37 4.98 11.35 Year 1 2 3 4 5 6 O 1.20 O 0.40 O 0.36 O 0.24 A, % 10.67 12.54 -8.82 5.56 27.34 21.94 C, % 12.98 45.23 16.52 14.28 -15.53 1.28 D, % 25.51 18.97 -11.57 21.42 26.22 17.23 E, % 8.96 29.67 -12.07 25.68 31.08 -12.87 S&P, % 0.34 15.94 4.66 -4.45 15.14 -2.89
Question 9 What is the probability of illiquidity given the lambda= 1.5? 63% 73% 83% O 93%

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