A manager believes his firm will earn a return of 16.90 percent next year. His firm...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A manager believes his firm will earn a return of 16.90 percent next year. His firm has a beta of 1.57, the expected return on the market is 13.50 percent, and the risk-free rate is 2.50 percent. Compute the return the firm should earn given its level of risk. (Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Required return 1.59% A manager believes his firm will earn a return of 16.90 percent next year. His firm has a beta of 1.57, the expected return on the market is 13.50 percent, and the risk-free rate is 2.50 percent. Compute the return the firm should earn given its level of risk. (Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Required return 1.59%
Expert Answer:
Answer rating: 100% (QA)
To compute the return the firm should earn given its level of risk we can ... View the full answer
Related Book For
Finance Applications and Theory
ISBN: 978-0077861681
3rd edition
Authors: Marcia Cornett, Troy Adair
Posted Date:
Students also viewed these finance questions
-
A manager believes his firm will earn a 14 percent return next year. His firm has a beta of 1.5, the expected return on the market is 12 percent, and the risk-free rate is 4 percent. Compute the...
-
A manager believes his firm will earn a 14 percent return next year. His firm has a beta of 1.2, the expected return on the market is 11 percent, and the risk-free rate is 5 percent. Compute the...
-
The treasurer of Kelly Bottling Company (a corporation) currently has $200,000 invested in preferred stock yielding 10 percent. He appreciates the tax advantages of preferred stock and is considering...
-
Write a function my_ieee_2_dec(ieee), where icce is a string contains 64 char- acters of ones and zeros representing a 64-bit IEEE754 number. The output should be d, the equivalent decimal...
-
Alex Inc, buys 40 percent of Steinbart Company on January 1, 2010, for $530,000. The equity method accounting is to be used. Steinbarts net assets on that date were $1.2 million. Any excess of cost...
-
Cooperstown Retros makes replica major league baseball jerseys that match those worn in the 1950s. The company budgeted production of 15,000 jerseys in 20Y1. Each jersey requires 1.5 square yards of...
-
Using an incremental internal rate of return (IRR) analysis, the decision to replace the "current best" by the "challenger"' is based on what decision rule? a. The internal rate of return of the...
-
The segmented income statement for XYZ Company for the year ended December 31, 2010, follows: The company is concerned about the performance of product A, and you have been asked to analyze the...
-
A figure skater spins at the end of her routine and slows down with an angular acceleration of "0.4" A per second squared. If she initially spun with a frequency of 2.35 Hz, how much time does it...
-
Multi Enterprises Ltd. is a Canadian-controlled private corporation whose fiscal period coincides with the calendar year. For the year 2020, the company's taxable income was calculated as follows:...
-
The following is the balance sheet at acquisition for G Company: All of G Company's net assets and liabilities approximated fair value except for inventory which had a fair value of $85,000 and Land...
-
Barbie has utility function Find her... u(x, y) = 2x+6y. 1. Income Expansion Path (ICC) when prices are p = 36 and q = 18. 2. Price Consumption Curve (PCC) when income is m = 72 and the second good...
-
They're rolling out a new car and in the ads you want people to feel highly elevated, better than the average person. What persuasive technique are you employing?
-
Provide three exceptions to the general rule that an owner of land cannot convey their land, "unless" (3 marks): A temporary use by-law passed under section 39 of the Planning Act must conform to...
-
Use a money market diagram (which shows a vertical supply of money curve and a downward sloping demand curve) to describe what will happen to the interest rate in the cases noted below. Make sure you...
-
I will give you 3 scenario. draw an AS/AD graph for each scenario. You also need to include 3 things... explain if it decreases/increase/ can't determine on a price level, real gdp (to be honest i...
-
1. Build the truth table for: (a) a three-input AND gate. (b) a four-input AND gate. 32. If we were to build a truth table for an eight-input AND gate, how many different combinations of inputs would...
-
Distinguish among total-moisture content, free-moisture content, equilibrium-moisture content, unbound moisture, and bound moisture.
-
Dudley Hill Golf Clubs market-to-book ratio is currently 2.5 times and the PE ratio is 6.75 times. If Dudley Hill Golf Clubs common stock is currently selling at $22.50 per share, what is the book...
-
A firm recently paid a $0.45 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In the fourth year, the stock price is expected to be $80. If the...
-
How does the choice of accounting method used to record fixed asset depreciation affect management of the balance sheet?
-
What are presumptions, and why are they important?
-
What is the burden of proof in a criminal trial? How does it compare to the burden of proof in a civil trial?
-
Distinguish between adversarial and inquisitorial justice.
Study smarter with the SolutionInn App