You believe the expected return on ABC is 14.70%, and that thevariance of ABC's returns is 0.3600. What is the coefficient of variationfor this company? Express the answer with 3 decimal places.

The coefficient of variation (CV) is calculated as: Coefficient of Variation (CV)=Expected…

Answered: You believe the expected return on ABC…

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter9: Stocks And Their Valuation

Section: Chapter Questions

Problem 3TCL

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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.
Sub: financial accounting
2. Required Rate of Return Suppose TRF = 4%, FM 9%, and FA = 8%. (a) Calculate Stock A's beta. Round your answer to one decimal place. - (b) If Stock A's beta were 1.3, then what would be A's new required rate of return? Round your answer to one decimal place. % 22222222 122122222322 2014 25226225 250-50 22 352525 2----- 2015
a. Given the following information, calculate the expected value for Firm C's EPS. Data for Firms A = and B are as follows: E(EPSA) = $5.10, and OA = $3.59; E(EPSB) $4.20, and B $2.97. Do not round intermediate calculations. Round your answer to the nearest cent. E(EPSC): $ A Firm A: EPSA Firm B: EPSB Firm C: EPSC BU Probability b. You are given that oc = $4.11. Discuss the relative riskiness of the three firms' earnings using their respective coefficients of variation. Do not round intermediate calculations. Round your answers to two decimal places. CV The most risky firm is -Select- V = 0.1 0.2 0.4 0.2 0.1 ($1.65) $1.80 $5.10 $8.40 $11.85 (1.20) 1.35 4.20 7.05 9.60 (2.54) 1.35 5.10 8.85 12.74
Fundamental Analysis:
Suppose TRF = 6%, TM = 11%, and b₁ = 1.2. a. What is n, the required rate of return on Stock i? Round your answer to one decimal place. 12 % b. 1. Now suppose TRF increases to 7%. The slope of the SML remains constant. How would this affect rm and r? I. Both rm and i will increase by 1 percentage point. II. rM will remain the same and r will increase by 1 percentage point. III. rM will increase by 1 percentage point and r₁ will remain the same. IV. Both rm and will decrease by 1 percentage point. V. Both rm and r will remain the same. I 2. Now suppose TRF decreases to 5%. The slope of the SML remains constant. How would this affect rm and n? I. Both rm and n will increase by 1 percentage point. II. Both rm and r will remain the same. III. Both rm and r₁ will decrease by 1 percentage point. IV. rM will decrease by 1 percentage point and r¡ will remain the same. V. rm will remain the same and ri will decrease by 1 percentage point. c. 1. Now assume that rRF remains at 6%, but rM…
Suppose rRF = 4%, rM = 11%, and bi = 1.6. A. What is ri, the required rate of return on Stock i? Round your answer to one decimal place. % B. 1. Now suppose rRF increases to 5%. The slope of the SML remains constant. How would this affect rM and ri? Both rM and ri will decrease by 1 percentage point. Both rM and ri will remain the same. Both rM and ri will increase by 1 percentage point. rM will remain the same and ri will increase by 1 percentage point. rM will increase by 1 percentage point and ri will remain the same. C. Now suppose rRF decreases to 3%. The slope of the SML remains constant. How would this affect rM and ri? Both rM and ri will remain the same. Both rM and ri will decrease by 1 percentage point. rM will decrease by 1 percentage point and ri will remain the same. rM will remain the same and ri will decrease by 1 percentage point. Both rM and ri will increase by 1 percentage point. D. 1. Now assume that rRF remains at 4%, but rM increases to 12%.…
Suppose TRF = 4%, TM = 9%, and b = 1.1. a. What is n, the required rate of return on Stock i? Round your answer to one decimal place. % b. 1. Now suppose rar increases to 5%. The slope of the SML remains constant. How would this affect ry and n? I. ry will increase by 1 percentage point and n will remain the same. II. Both ry and r, will decrease by 1 percentage point. III. Both rm and r, will remain the same.. IV. Both r and r, will increase by 1 percentage point. V. r will remain the same and r, will increase by 1 percentage point. -Select- v 2. Now suppose rar decreases to 3%. The slope of the SML remains constant. How would this affect ry and n? I. TM will decrease by 1 percentage point and n will remain the same. II. rs will remain the same and n will decrease by 1 percentage point. III. Both ry and r, will increase by 1 percentage point. IV. Both ry and r, will remain the same. V. Both ry and r, will decrease by 1 percentage point. Select
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Required Rate of Return Suppose rRF = 3%, rM = 8%, and rA = 7%. Calculate Stock A's beta. Round your answer to one decimal place. If Stock A's beta were 1.1, then what would be A's new required rate of return? Round your answer to one decimal place. %

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