Ask Question, Ask an Expert


Ask Basic Finance Expert

problem 1: Suppose that the risk-free rate is 5% and that the market risk premium is 7%. If stock has a required rate of return of 13.75%, determine its beta?

a) 1.25
b) 1.35
c) 1.37
d) 1.60
e) 1.96

problem 2: An investor is making a portfolio by investing $50,000 in stock A which consists of a beta of 1.50, and $25,000 in stock B which consists of a beta of 0.90. The market risk premium is equivalent to 2% and Treasury bonds have a yield of 4%. Determine the required rate of return on the investor's portfolio?

a) 6.6%
b) 6.8%
c) 5.8%
d) 7.0%
e) 7.5%

problem 3: The probability distribution is shown; determine the expected return and the standard deviation of returns for Security J?

101_probability distribution.jpg

a) 15%; 6.50%
b) 12%; 5.18%
c) 15%; 3.16%
d) 15%; 10.00%
e) 20%; 5.00%

problem 4: If D1 = $2.00, g (which is constant) = 6% and P0 = $40, determine the stocks expected total return for the coming year?

a) 10.8%
b) 11.0%
c) 11.2%
d) 11.4%
e) 11.6%

problem 5: A stock is expected to pay a dividend of $1 at the end of year. The required rate of return is rs = 11% and the expected constant growth rate is 5%. Determine the current stock price?

a) $16.67
b) $18.83
c) $20.00
d) $21.67
e) $23.33

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M97105

Have any Question? 

Related Questions in Basic Finance

For this assignment you will analyze a home mortgage loan1

For this assignment, you will analyze a home mortgage loan. 1. Find a description, asking price, and real estate taxes of a house for sale, and decide on a purchase price you would be willing to pay (assuming you have th ...

Paychex inc payx recently paid an 088 dividend the dividend

Paychex Inc. (PAYX) recently paid an $0.88 dividend. The dividend is expected to grow at a 15 percent rate. The current stock price is $55.71. What is the return shareholders are expecting? (Do not round intermediate cal ...

You drink 5 beers to celebrate the end of your risk

You drink 5 beers to celebrate the end of your risk management and insurance class, then have an accident while driving home from the bar. The police charge you with drunk driving, and with hitting another automobile fro ...

Assignment discussion-financing decisionsthe funding

Assignment: Discussion-Financing Decisions The funding choices of a company have important implications for both the risk and valuation of the company and the securities held by the corporate stakeholders. The analysis c ...

Why is knowledge of finance important in running of

Why is knowledge of finance important in running of organizations?

You successfully completed statistics and the math

You successfully completed statistics, and the Math Department Chair recruited you to be a tutor. It's day one on the job, and your first pupil is correcting her mistakes on a recent statistics exam. She incorrectly list ...

Explain why a well-capitalized domestic banking system

Explain why a well-capitalized domestic banking system might be important for the successful maintenance of a fixed exchange-rate regime.

Write an essay about comcast xfinityexplain the cost of

Write an essay about comcast xfinity Explain The Cost of Unused Resource Capacity, The Lack of Clear Business Purpose, Lack of Senior Management Commitment, And how Individual and Organization Resistance to Change effect ...

Impact of expected inflation how might expectations of

Impact of Expected Inflation: How might expectations of higher oil prices affect the demand for loanable funds, the supply of loanable funds, and interest rates in the United States? Will the interest rates of other coun ...

List and describenbsptwonbspsectors you believe spends the

List and describe  two  sectors you believe spends the most money in health care? (Example sectors; hospital care, home health care, governmental insurance, pharmaceuticals, etc.)

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate