a
Adequate information:
Beta of growth in GNP
Beta of inflation
Expected value of growth in GNP
Expected value of inflation
Actual value of growth in GNP
Actual value of inflation
To compute: Systematic risk of the stock
Introduction: Systematic risk refers to the risk that is non-diversifiable that is inherent to the entire market.
b
Adequate information:
Old market share
New market share
Increase in stock return for every 1% increase in market share
To compute: Unsystematic risk
Introduction: Unsystematic risk refers to the risk that is specific to a company. Such type of risks is diversifiable.
c
Adequate information:
Expected return on the stock
Systematic risk
Unsystematic risk
To compute: Total return on the stock
Introduction: Total return refers to the return that a stock earns after the consideration of all types of risks.

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Chapter 12 Solutions
CORPORATE FINANCE
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