Suppose the risk-free interest rate is 4%. a. i. Use the beta you calculated for the stock
Question:
a. i. Use the beta you calculated for the stock in Problem 33(a) to estimate its expected return.
ii. How does this compare with the stock's actual expected return?
b. i. Use the beta you calculated for the stock in Problem 33(b) to estimate its expected return.
ii. How does this compare with the stock's actual expected return?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 53% (15 reviews)
a ER M 30 10 10 i ER 4 15 10 4 ...View the full answer
Answered By
Wonder Dzidzormenu
As a professional accountant and a teacher, I explain account ing concepts in a more practical way that makes students more connected to the subject.
With over 10 years of teaching accounting , I offer a well constructed , easily understood and in-depth explanations to students questions.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Corporate Finance questions
-
Suppose the market risk premium is 5% and the risk-free interest rate is 4%. Using the data in Table 10.6, calculate the expected return of investing in a. Starbucks stock. b. Hersheys stock. c....
-
Assume that the risk-free interest rate is 4% per annum with continuous compounding and that the dividend yield on a stock index varies throughout the year. In February, May, August, and November,...
-
Suppose the risk-free interest rate is 4%. a. Having $200 today is equivalent to having what amount in one year? b. Having $200 in one year is equivalent to having what amount today? c. Which would...
-
A database is to be made to store information about a catalogue of CDs. Information to be stored about each CD includes title, price, genre, and a list of tracks. Each CD will also have an artist,...
-
The following transactions, adjusting entries, and closing entries were completed by D. Hurd Furniture Co. during a three-year period. All are related to the use of delivery equipment. The...
-
Discuss the legality of online gambling in the United States. Discuss the legality of running an online gambling Web site in the United States.
-
Design Data sold a piece of machinery to HHB Drafting Company. However, after HHB had taken possession of the machine, it discovered damage and revoked the contract. The court found that the...
-
On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed the following transactions during the month: a. Sharon Matthews transferred cash from a personal bank account to an...
-
Describe a typical backup scenario and share your preferred Oracle database backup type. Why is it most appropriate? Is there a role for the Recovery Manager (RMAN) for this procedure? Explain.
-
Crane Company has a December 31 fiscal year end. Selected information follows for Crane Company for three independent situations as at December 31, 2020: 1. Crane purchased a patent from Hopkins Inc....
-
Suppose the market portfolio is equally likely to increase by 30% or decrease by 10%. a. Calculate the beta of a firm that goes up on average by 43% when the market goes up and goes down by 17% when...
-
Suppose Tex stock has a volatility of 40%, and Mex stock has a volatility of 20%. If Tex and Mex are uncorrelated, a. What portfolio of the two stocks has the same volatility as Mex alone? b. What...
-
What secondary and tertiary structures are characteristic of fibrous proteins?
-
Why would an ounce of gold be priced higher than an ounce of coffee beans, even though coffee is generally considered more essential than gold? Explain the paradox in terms of marginal and total...
-
laquisha converted her sole proprietorship to an S corporation and transferred several assets to the corporation the asset cost $ 20,000 with adjusted basis of $14,700 she also spent an additional $...
-
How can organizations foster a culture of continuous improvement and accountability in team-building efforts, incorporating feedback mechanisms, performance metrics, and recognition systems to...
-
What role does emotional intelligence play in effective team-building, including the ability to recognize and regulate emotions, empathize with team members, and navigate interpersonal dynamics to...
-
A shop has implemented a new coupon discount program for its customers. Employees could be scanning coupons but charging the customers full price and then pocketing the difference.) explain,construe...
-
A city transfers cash of $20,000 from its general fund to an enterprise fund to pay for work performed by the enterprise fund for the school system. How does the city report this transfer on its...
-
-4 1 9. Let A = Find A-1, (A") and verify that (A")= (A-1)".
-
Which of the bonds AD is most sensitive to a 1% drop in interest rates from 6% to 5% and why? Which bond is least sensitive? Provide an intuition explanation for your answer.
-
HMK Enterprises would like to raise $10 million to invest in capital expenditures. The company plans to issue five-year bonds with a face value of $1000 and a coupon rate of 6.5% (annual payments)....
-
Assume Evco, Inc., has a current stock price of $50 and will pay a $2 dividend in one year; its equity cost of capital is 15%. What price must you expect Evco stock to sell for immediately after the...
-
ABC partnership is dissolving.assume the noncash assets ( axxounts recwivable with a carrying amount of 4 5 0 0 0 and equupment with a cost of 6 5 0 0 0 and accumulated depreciation of 3 5 0 0 0 )...
-
A taxpayer expenses out $ 1 5 0 , 0 0 0 of tangible property under IRC Section 1 7 9 when they file their Federal return. The taxpayer will need to apportion the Section 1 7 9 between California...
-
The purpose of this part is to provide you with a better understanding of the origins of the Codification. For this part, you should stay in the Codification, clicking on the tab Other Sources ( on...
Study smarter with the SolutionInn App