EBK FUNDAMENTALS OF CORPORATE FINANCE
3rd Edition
ISBN: 9780133762808
Author: Harford
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Chapter 12, Problem 27P
Summary Introduction
Beta:
Beta 
is the covariance of a security with the market upon the variance of the market. Beta 
measures the change in percentage in the excess return of a particular security for 1% change in the excess return of a market portfolio or a benchmark portfolio. The beta 
of a market portfolio is always 1. However, the securities may have either higher or lower betas as compared to the beta of the market portfolio. The primary reason for this difference is the sensitivity of the individual industries to the economy.
The beta 
of a portfolio is the weighted average beta of the overall stocks in a portfolio.
The beta 
of a portfolio with three stocks, Stock E, Stock C, and Stock K can be calculated using the formula given below.
Where,
is the beta of a portfolio.
is the weight of a stock.
To determine:
The beta of the portfolio.
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Problem 5-5 Calculating IRR
A firm has a project with the following cash flows:
Year
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0
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23
11,700
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The appropriate discount rate is 18 percent. What is the IRR for this project? (Do not
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IRR
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Chapter 12 Solutions
EBK FUNDAMENTALS OF CORPORATE FINANCE
Ch. 12 - Prob. 1CCCh. 12 - How is the expected return of a portfolio related...Ch. 12 - What determines how much risk will be eliminated...Ch. 12 - When do stocks have more or less correlation?Ch. 12 - What is the market portfolio?Ch. 12 - Prob. 6CCCh. 12 - Prob. 7CCCh. 12 - Prob. 8CCCh. 12 - Prob. 1CTCh. 12 - What does correlation tell us?
Ch. 12 - Prob. 3CTCh. 12 - What does beta measure? How do we use beta?Ch. 12 - Prob. 5CTCh. 12 - Prob. 6CTCh. 12 - You buy 100 shares of Tidepool Co. for $40 each...Ch. 12 - You buy 100 shares of Tidepool Co. for $40 each...Ch. 12 - Prob. 3PCh. 12 - You have $70,000. You put 20% of your money in a...Ch. 12 - 6. There are two ways to calculate the expected...Ch. 12 - Prob. 6PCh. 12 - 8. Stocks A and B have the following returns (see...Ch. 12 - 9. Using the data in the following table, estimate...Ch. 12 - Using your estimates from Problem 9 and the fact...Ch. 12 - Prob. 10PCh. 12 - Using the spreadsheet from Problem Il and the fact...Ch. 12 - 13. Using the data in Table 12.2,
Compute the...Ch. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21PCh. 12 - Prob. 22PCh. 12 - Prob. 23PCh. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26PCh. 12 - Prob. 27PCh. 12 - Prob. 28PCh. 12 - Prob. 29PCh. 12 - Prob. 30PCh. 12 - Prob. 31PCh. 12 - Prob. 32PCh. 12 - Prob. 33PCh. 12 - Prob. 34P
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