Profitability is a measure of an organization's profit relative to its expenses. Organizations that are more...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Profitability is a measure of an organization's profit relative to its expenses. Organizations that are more efficient will realize more profit as a percentage of its expenses than a less-efficient organization, which must spend more to generate the same profit. Briefly explain how corporate finance managers measure the profitability of a company. b. Diamond Sdn. Berhad has common stock with a listed beta coefficient of 1.40. Treasury Bonds are paying 6.2% and the overall market rate according to Standard and Poor's is 13.5%. Using the Capital Asset Pricing Model (CAPM), analyze the cost of common stock. c. Equity in the company Cahaya Alam has an expected return of 12%, a beta of 1.4 and a standard deviation of 20%. The current risk-free interest is 10%. Analyze the current expected market return. d. The current risk-free interest rate is 5%. The expected return on the market portfolio is 14%. Analyze the expected return of a stock with a beta value of 0.5. Profitability is a measure of an organization's profit relative to its expenses. Organizations that are more efficient will realize more profit as a percentage of its expenses than a less-efficient organization, which must spend more to generate the same profit. Briefly explain how corporate finance managers measure the profitability of a company. b. Diamond Sdn. Berhad has common stock with a listed beta coefficient of 1.40. Treasury Bonds are paying 6.2% and the overall market rate according to Standard and Poor's is 13.5%. Using the Capital Asset Pricing Model (CAPM), analyze the cost of common stock. c. Equity in the company Cahaya Alam has an expected return of 12%, a beta of 1.4 and a standard deviation of 20%. The current risk-free interest is 10%. Analyze the current expected market return. d. The current risk-free interest rate is 5%. The expected return on the market portfolio is 14%. Analyze the expected return of a stock with a beta value of 0.5.
Expert Answer:
Answer rating: 100% (QA)
a Corporate finance managers measure the profitability of a company by analyzing various financial metrics and ratios such as gross profit margins ope... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Refer to Exercise 13.69. a. Give the implied regression line of pulse- rate difference on height and weight for a smoker who did not run in place and who has engaged in little physical activity. b....
-
ABC is a new company and won't be paying dividend for the next five years. In year 6 it will pay a $3 dividend, then a $5 dividend and a $7 dividend year 8. Afterwards dividend will slow to 2%...
-
2. The armadillo is known as one of the world's fastest land animals. On one particular occasion, a biologist observed an armadillo named [N57E] for 6.00 s. The armadillo then ran 19.0 m [N23W]. What...
-
In Problems 4352, graph each system of linear inequalities. State whether the graph is bounded or unbounded, and label the corner points. 0 x y 0 x + y = 1 x + y 7 2x + y 10
-
Assume that the business in Exercise 6-5 maintains a perpetual inventory system, costing by the first-in, first-out method. Determine the cost of merchandise sold for each sale and the inventory...
-
Prove that for $6 J$ symbols \[\left\{\begin{array}{lll}a & b & c \\d & e & 0\end{array} ight\}=\frac{(-1)^{a+b+c}}{\sqrt{(2 a+1)(2 b+1)}} \delta_{a e} \delta_{b d}\] Note that since the $6...
-
A wing generates a lift \(\mathscr{L}\) when moving through sea-level air with a velocity \(U\). How fast must the wing move through the air at an altitude of \(10,000 \mathrm{~m}\) with the same...
-
Farrior Fashions needs to replace a beltloop attacher that currently costs the company $40,000 in annual cash operating costs. This machine is of no use to another company, but it could be sold as...
-
Sam and Alicia arrived outside their boss's office at the same time and took a seat. Both exchanged a cordial "hello", but they didn't say much else as they waited outside. Fidgeting nervously in...
-
Diatomic nitrogen and oxygen molecules can stick to the surface of a container because of van der Waals forces. Assume that these molecules are stuck to the surface with binding energy...
-
explain how your acquisition recommendation will impact the companys success in different scenarios?
-
What is an optimum currency area? List the criteria that an optimum currency area must satisfy.
-
How would an asymmetric supply-side shock to a country that was a member of a currency union affect the country and the other members of the currency union?
-
What are the main characteristics of asset bubbles?
-
Is it always possible to discern a trend in any time-series data? What problems might arise if trends are apportioned to time-series data that are not really present?
-
What is meant by the term efficient markets hypothesis?
-
In neutral or faintly alkaline solution, 8 moles of permanganate anion quantitatively oxidize thiosulphate anions to produce X moles of a sulphur containing product. The magnitude of X is
-
Time Solutions, Inc. is an employment services firm that places both temporary and permanent workers with a variety of clients. Temporary placements account for 70% of Time Solutions' revenue;...
-
Lauryl alcohol, C12H25OH, is prepared from coconut oil; it is used to make sodium lauryl sulfate, a synthetic detergent. What is the molality of lauryl alcohol in a solution of 17.1 g lauryl alcohol...
-
Give the structural formula for a portion of the chain polymer obtained by the reaction of ethylene glycol, CH2OHO CH2OH with malonic acid, HOOCCH2COOH.
-
a. Consider a metal atom, which we will give the symbol M. Metal M can readily form the M+ cation. If the sphere on the left below represents the metal atom M, which of the other three spheres would...
-
A mixture of benzene and monochlorobenzene is to be separated into almost pure products by distillation. Determine an appropriate operating pressure at the top of the tower.
-
The feed to a distillation tower consists of \(14.3 \mathrm{kmol} / \mathrm{hr}\) of methanol, \(105.3 \mathrm{kmol} / \mathrm{hr}\) of toluene, \(136.2 \mathrm{kmol} / \mathrm{hr}\) of ethylbenzene,...
-
In a reboiled absorber, operating as a deethanizer at 400 psia to separate a light hydrocarbon feed, conditions at the bottom tray are: Liquid Phase Molar flow = 1, \(366 \mathrm{lbmol} /...
Study smarter with the SolutionInn App