Question: Erickson Inc is considering two capital budgeting projects project A has an expected return of 25% and a standard deviation of 30% while project has
Erickson Inc is considering two capital budgeting projects project A has an expected return of 25% and a standard deviation of 30% while project has an expected return of 15% and a standard deviation of 10%. Use the coefficient of variation to select a better investment? Ivan Knobel holds a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. He is in the process of buying 1, 000 shares of Syngine Corp at $10 a share and adding it to his portfolio. Syngine has an expected return and beta on the portfolio be after purchase of the Syngine stock? Nystrand Corporation's stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5.00%, what is the market rate of return? Suppose Stan holds a portfolio consisting of a $10, 000 investment in each of 8 different common stocks. The portfolio's beta is 1.25. Now suppose Stan decided to sell one of his stocks that has a beta of 1.00 and to use the proceeds to buy a replacement stock with a beta of 1.35. What would the portfolio's new beta be? Define market risk and company-specific risk in Capital Asset Pricing model
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