EXERCISES

$1)$ By $2020$ the rate of return of Treasury Bill was $5\mathrm{.}25\%$ and market rate of return was $9\mathrm{.}75\%,$ with $\mathrm{.}93$ of beta for J&M Warehouse$$s common stock. What is the expected rate of return of its common stocks?.

$2)$ Consider the previous exercise and calculate beta if the market rate of return

was $12\mathrm{.}25\%.$

$3)$ By $2021$ the G&J$$s financial instrument was $13\mathrm{.}7\%$ rate of return and the Treasury Bill was $7\mathrm{.}65\%.$ If beta was $1\mathrm{.}85,$ calculate the market rate of return and calculate the market risk premium.

$4)$ The capital structure of MPA Consulting Inc. is distributed as follow $($in millions$)$: $$835$ to equity and $35\%($total value$)$ to debt. If the rate of return of capital required is $11\mathrm{.}5\%$ and rate of return of debt is $6\mathrm{.}25\%.$ Calculate the debt, the firm$$s value and the expected rate of return on a portfolio of all the firm$$s securities if the firm faces a $30\%$ corporate income tax rate.