Question: Think Rs = Rf + Beta (Rm ? Rf). If the Return to common stock for Total Inc. (Rs) is 13.0%, the Beta for Total

Think Rs = Rf + Beta (Rm ? Rf). If the Return to common stock for Total Inc. (Rs) is 13.0%, the Beta for Total is 1.4 and Rf is 2.0%, What is the market return? If Beta is recalculated as 1.6 what is the new Return to Total? (C) What is the equity risk premium in B)? (D) Does an increasing beta change affect the equity risk premium? (E) What is the new return to Total if the Rf changes to 4.0% with a Beta of 1.6

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

RETURN AND RISK RELATIONSHIP: CAPITAL ASSET PRICING MODELThe CFO of Bunyan Lumber Corporation, Anita Rai has decided to invest some money in the financial market to diversify the risks of business...

Stock Valuation: Dividend Discount Model The rate on U.S. Treasury bills is 4% and the stock market is expected to make 10% over the next several years. Firm X's beta has been calculated as 1.1 and...

Colin was recently hired by Coleman Electronics as a junior budget analyst. He is working for the Venture Capital Division and has been given for capital budgeting projects to evaluate. He must give...

7 8 9 3 4 You are a financial analyst for Greenback, Inc. a manufacturing firm, located in Kansas. Your boss, 5 the CFO of the company has asked you to create some spreadsheets and provide some...

This is my second time posting this question. If you are unsure how to solve it, please do not answer. Please do this problem in Microsoft Excel. Nevermind, I no longer need assitance. The correct...

HOME DEPOT NYSE:HD RECENT 215.90 RATIO 20.9 ( 3.0% VALLE 1139 -- Gain Return Thes STOCK VARITH 020 Percent Bu TITLIIII 10 2014 - Ove 17 2008-Rec PE DIVD 1.18 : ) Median: 19.0 / PE RATIO YLD LINE High...

Please insert all values 1 . Assume 1 . 2 for equity beta. 2 . Use the depreciation schedule on p . 1 7 4 ( MACRS 7 - year class ) . 3 . Refer to the Baldwin Company case in Section 6 . 2 ( pp . 1 7...

1 . Assume 1 . 2 for equity beta. 2 . Use the depreciation schedule on p . 1 7 4 ( MACRS 7 - year class ) . 3 . Refer to the Baldwin Company case in Section 6 . 2 ( pp . 1 7 2 - 1 7 9 ) . 4 . Compute...

1 & 2 risk free rate: 1.75% expected rate of return for the market: 9.5% Beta of VZ: 0.88 VZ total debt, interest and shares issued can be found in VZ financial statements assume market value of all...

question and assignment on right hand side and answer sheet on left hand side Cost of Capital Spreadsheet Example Module IX Name: Date: I Capital Structure 2,000,000 1,000,000 6,000,000 9,000,000...

Give an equation showing the preparation of each of the following organometallic compounds. (a) CH3 - MgI (b) [(CH3)2CH-CH2I3B

Consider the following equilibrium systems: Predict the change in the equilibrium constant Kc that would occur in each case if the temperature of the reacting system were raised. (a) A2B (b) A BC (c)...

Loans from qualified plans can never exceed 5 0 % of the participant's vested account balance. True False

1 . Background: In the global trade context, a large percentage of costs is experienced with inland logistics and transportation activities which also have significant impacts on environment. To be...

What are three ways that visual aids complement your business reports? (Objective 1)

Construct a graph that shows Student Housing at Be Smart University for 2007. This graph is for an oral presentation and will not need a figure number but will need a title. Follow traditional style...

Technology.Teamwork. Individually or as a group, develop a proposal on one of the following topics. The proposal is to be sent to the appropriate administrator at your college. (Objectives 1 and 3)...