3) You have $20,000. After the success of the sequel of the Hunger Games, you want...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
3) You have $20,000. After the "success" of the sequel of the "Hunger Games", you want to know if Lions Gate Entertainment Corp. (NYSE:LGE) is a good buy. The firm's total risk is 19%, its systematic risk is 0.57, the t-bill rate is 2.0%, the 30 year treasury rate is 3.5%, and the average market return is 8.8%. a) What is the expected return on Lions Gate Entertainment Corp? b) Assume you constructed a DCF model to evaluate Lions Gate Entertainment Corp and you found that the current market price of the stock implies an expected return of 8.05% [Note: You do not actually have to do a DCF model for this problem]. Given you answer in part (a), is the firm overvalued, undervalued, or properly priced? Explain. 3) You have $20,000. After the "success" of the sequel of the "Hunger Games", you want to know if Lions Gate Entertainment Corp. (NYSE:LGE) is a good buy. The firm's total risk is 19%, its systematic risk is 0.57, the t-bill rate is 2.0%, the 30 year treasury rate is 3.5%, and the average market return is 8.8%. a) What is the expected return on Lions Gate Entertainment Corp? b) Assume you constructed a DCF model to evaluate Lions Gate Entertainment Corp and you found that the current market price of the stock implies an expected return of 8.05% [Note: You do not actually have to do a DCF model for this problem]. Given you answer in part (a), is the firm overvalued, undervalued, or properly priced? Explain.
Expert Answer:
Answer rating: 100% (QA)
Lions Gate Entertainment Corp Investment Analysis a Expected Return Using the Capital Asset Pricing ... View the full answer
Related Book For
Financial Reporting and Analysis Using Financial Accounting Information
ISBN: 978-1439080603
12th Edition
Authors: Charles H Gibson
Posted Date:
Students also viewed these finance questions
-
You are an independent consultant, providing strategy, execution, and project management services to several clients, across a variety of different project types. Your skills are valued by these...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Since the early 2000s, there has been a significant increase in the price of corn-based ethanol. a. A key input in the production of corn-based ethanol is corn. Use an appropriate diagram to explain...
-
Should our government guarantee all criminal defendants the right to trial by jury? Think about how the Bill of Rights came into existence, and think about whether the right to trial is still...
-
Pik Corporation acquired 80 percent of Sel Corporation's common stock on January 1, 2011, for $210,000 cash. The stockholders' equity of Sel at this time consisted of $150,000 capital stock and...
-
Armoring Military Planes During the Second World War, the U.S. military collected data on bullet holes found in B-24 bombers that returned from flight missions. The data showed that most bullet holes...
-
On December 31, 20X5, KTR Corporation acquired 80% of the outstanding shares of SJC Limited for $ 5,000,000. KTR is a Vancouver- based company, while SJC is based in Las Vegas, in the US. SJCs...
-
Ramer and Knox began a partnership by investing $ 6 0 , 0 0 0 and $ 9 0 , 0 0 0 , respectively. The partners agreed to share net income and loss by giving annual salary allowances of $ 5 0 , 0 0 0 to...
-
The graph below shows the market for pineapples. Price (dollars per pound) $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 0 Market for Pineapples 10 20 30 S 40 Quantity (tons) 1 50 D 60
-
Calculate the contribution margin dollars per unit sold based on a selling price of $26.36 Direct Labor Direct Materials Variable manufacturing overhead Fixed manufacturing overhead Sales commissions...
-
A centrifuge slows down from 691 rpm to 281 rpm in 14 seconds. Assuming constant angular acceleration, determine the number of revolutions it goes through in this time. Express your answer using zero...
-
Consider a production process where flowers are grown (the output) using gardeners (labor) and greenhouses (capital). The quantity of flowers grown per day with various combinations of labor and...
-
Fill in the Table below (note: this is just for practice - you can copy this and try fill the values just for practice): # of Workers Total Product P of Output Wage Rate VMP 0 $5 $400 1 $5 $400 2 $5...
-
Manufacturing cost data for Cullumber Company are presented below: Provide the missing amounts for each letter. Direct materials used Direct labour Manufacturing overhead Total manufacturing costs...
-
What conclusion can you reach by analyzing the graph in figure 1, what does it indicate or what does it predict? Use chemical rationale to justify your answer. 70 60 50 40 30 10 15 20 25 30 35...
-
At the beginning of the year, Lam Ltd. had total assets of $800,000 and total liabilities of $500,000. Use this information to answer each of the following independent questions. (a) If Lam's total...
-
Why could a review of savings deposit balances be important when reviewing a banks financial statements?
-
Which inventory costing method results in the highest balance sheet amount for inventory? (Assume inflationary conditions.)
-
What is the basic guideline for consolidation?
-
Initially, both legs of a mercury manometer are open to the atmosphere, and the mercury height in the left leg is \(40.0 \mathrm{~mm}\). You inflate a balloon until it has a surface area of \(0.300...
-
At an atmospheric pressure of \(1.00 \mathrm{~atm}\), the height of the liquid in the tube of a mercury barometer is \(760 \mathrm{~mm}\) only if you ignore capillary rise in the tube. Obtain an...
-
A hydrogen-filled balloon is used to lift a \(125-\mathrm{kg}\) stone off the ground. The basket holding the stone has a mass of \(15.0 \mathrm{~kg}\). What must the minimum radius \(R\) of the...
Study smarter with the SolutionInn App