Suppose the risk-free return is 3% and you measure the market risk premium to be 6%. Cisco

Question:

Suppose the risk-free return is 3% and you measure the market risk premium to be 6%. Cisco has a beta of 1.2. According to the CAPM, what is its expected return?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals Of Corporate Finance

ISBN: 9781292437156

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

See More Books

Question Posted: Feb 27, 2024 03:07 AM

See More Questions

Suppose the risk free return is 4%. The beta of a managed portfolio is 1.2, the alpha is 1%, the average return is 14%. Based on Jensen's measure of portfolio performance, calculate the return on...
What is the NPV for the following project cash flows at a discount rate of 15%? C0=-1,000, C1=700, C2=700 SOB Floor Company has a risk premium of 21% and a beta of 3. If the risk free rate is 3%,...
1 High P/E ratios tend to indicate that a company is expected to _______, ceteris paribus A grow quickly B grow at the same speed as the average company C grow slowly D not grow E None of the options...
Sketch the graph of the function and state its domain. f (x) = ln |x|
Compare and contrast these medical practices by selecting a common theme: religious understanding, political or legal authority, scientific knowledge, or economic influences. What do these medical...
Frank Carra drives a truck for Weide Transport Ltd (WTL). During an otherwise routine journey, a deer jumped onto the highway and caused Carra to swerve out of his lane and onto a strip of gravel...
Explain how the method of instrumental variables can be used to estimate the compensating differential associated with employer-provided health benefits.
Penny Pincher Company has a defined benefit pension plan for its employees. The following pension data are available at year- end ( in millions): Accumulated benefit obligation $ 142 Projected...
The Atlanta Food Bank is a nonprofit organization that receives donations of food and distributes this food to appropriate charitable organizations. View the additional information. He used this wait...
Suppose the stock of Bankruptcy Auction Services Inc. (BAS) has a negative beta of -0.30. How does its expected return compare to the risk-free rate, according to the CAPM? Does your result make...
Suppose that in the coming year, you expect SysCos stock to have a standard deviation of 30% and a beta of 1.2, and UniCos stock to have a standard deviation of 41% and a beta of 0.6. Which stock...
A Carnot engine has an efficiency of 0.55. If this engine were run backward as a heat pump, what would be the coefficient of performance?
Given our goal as stated in the preceding section (maximize the value of the stock), an obvious question comes up: What is the appropriate goal when the firm has no traded stock? Corporations are...
Discuss development and growth of derivative markets in the US.
A substance X shows a weight of 100.00 g when weighed in air. If the density of air is 0.0012 g/ml; density of calibration weights 8.0 g/ml.; and density of X is 1.33 g/ml., find the true mass.
Additional Data: a . Bought equipment for cash, $ 4 8 , 9 0 0 . b . Paid $ 1 4 , 7 0 0 on the long - term note payable. c . Issued new shares of stock for $ 3 8 , 0 5 0 cash. d . Dividends of $ 6 5 0...
At a certain pizza restaurant, a medium pizza with only cheese costs $ 5.99 . Each additional topping costs an additional $ 0.50 . The tax on the pizza is 8 % , and the delivery fee is $ 1 . If...
What is meant by the term a culture-bound theory of motivation?
Evaluate the function at the given value(s) of the independent variable. Simplify the results. (x) = cos 2x (a) (0) (b) (- /4) (c) (/3) (d) ()
Calculating yields in Problem 1, what was the dividend yield? The capital gains yield?
Return Calculations Rework Problems 1 and 2 assuming the ending share price is $79.
Calculating Returns Suppose you bought a 6 percent coupon bond one year ago for $940. The bond sells for $920 today. a. Assuming a $1,000 face value, what was your total dollar return on this...
Outline the ethical decision-making models of deontology and utilitarianism. Apply deontology and utilitarianism to the following criminal justice actors: lawyers and police officers. Explain how...
You create an asymmetric butterfly using put options. You purchase 4 options with a strike of 40 and take additional positions in puts with strikes of 60 and 65. What is the maximum payoff you could...
Suppose an investor faces a risk x that is uniformly distributed over [-1,1]. She is exposed to another risk y (on her labor income) that is independent from x . The payoffs of y are distributed as:...

Suppose the risk-free return is 3% and you measure the market risk premium to be 6%. Cisco

Question:

Step by Step Answer:

PLAN We can use Eq 126 to compute the expected retu...View the full answer

Fundamentals Of Corporate Finance

Students also viewed these Business questions