The stock of Aardvark Enterprises has a beta of 1.5 and that of Zebra Enterprises has a
Question:
The stock of Aardvark Enterprises has a beta of 1.5 and that of Zebra Enterprises has a beta of .7. The risk-free rate is assumed to be 3 percent, and the difference between the expected return on the market and the risk-free rate is assumed to be 8.0 percent. The expected returns on the two securities are:
Transcribed Image Text:
E(RAardvark) = .03 +1.5(.08) = .15, or 15% E(RZebra) = .03 +.7(.08) = .086, or 8.6%
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 66% (3 reviews)
The expected returns on the two securitiesAardvark Enterprises and Zebra Enterprisescan be calculate...View the full answer
Answered By
Albert Kinara
i am an expert research writer having worked with various online platform for a long time. i also work as a lecturer in business in several universities and college part time and assure you well researched and articulate papers. i have written excellent academic papers for over 5 year and have an almost similar experience experting many clients in different units. bachelor of commerce (finance)
masters in strategic management
phd finance
4.60+
26+ Reviews
48+ Question Solved
Related Book For
Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Question Posted:
Students also viewed these Business questions
-
The CFO of Bunyan Lumber Corporation, Anita Rai has decided to invest some money in the financial market to diversify the risks of business operations and increase rate of return. She has been...
-
Define finger print?
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
Describe how you plan to allocate your budget to each promotional activity. Provide a brief rationale. First, when developing a marketing budget plan, you want to start with the total budget...
-
Compare the trait, behavioral, and situational approaches to leadership in terms of practical value to organizations seeking to identify and develop present and future leaders.
-
Indicate whether a debit or credit is required to close each of the following accounts. Use the symbols D if a debit is required, C if a credit is required, and N if the account is not closed at the...
-
The following information was taken from the records of Mobile Motorsports, Ince, at September 30, 2008. Requirement Prepare a multistep income statement for Mobile Motorsports, Inc., for the fiscal...
-
Cybernetics Inc. issued $60 million of 5% three-year bonds, with coupon paid at the end of every year. The effective interest rate at the beginning of Years 1, 2, and 3 was 8%, 5%, and 2%. Required:...
-
The Charlotte Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: (Click the icon to view the department information.) Each...
-
Consider the following possible returns both on the stock of Jelco, Inc., and on the market: Though the return on the market has only two possible outcomes (15% and 5%), the return on Jelco has four...
-
Stock Y has a beta of 1.2 and an expected return of 11.5 percent. Stock Z has a beta of .80 and an expected return of 8.5 percent. If the risk-free rate is 3.2 percent and the market risk premium is...
-
Dry air at 35C and a velocity of 15 m/s flows over a long cylinder of 20-mm diameter, the cylinder is covered with a thin porous coating saturated with water, and an imbedded electrical heater...
-
DUAL MONITORS CORPORATION Balance Sheets December 31, 2024 and 2023 2024 2023 Assets Current assets: Cash Accounts receivable Inventory Investments Long-term assets: Land Equipment Less: Accumlated...
-
1- Develop an analysis Excel sheet (or using other programs) to calculate engineering properties of fiber-reinforced composite materials using Strength-of-materials approach: Inputs: Outputs: Fiber...
-
What is the output of the following App? 1 point public class Three Int { int int1 = 5; int int2 = 7; int int3 = 4; public String toString() { } return int3 + "," + intl + ", and" + int2; public...
-
Menlo Company distributes a single product. The company's sales and expenses for last month follow: tes Sales Variable expenses Contribution margin Fixed expenses Net operating income Required: Total...
-
It is found that the standard deviation of the diameters of rivets produced by a certain machine over a long period is 0.018 cm. The diameters of a random sample of 100 rivets produced by this...
-
The records of Diskount Depart-ment Stores Inc. provided the following data for 20X5: Sales ( gross)........... $ 800,000 Sales returns........... 2,000 Additional markups......... 9,000 Additional...
-
For each of the following transactions, indicate whether it increases, decreases, or has no effect on the following financial ratios: current ratio, debt-to-equity ratio, profit margin ratio, and...
-
Birds Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a...
-
Birds Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a...
-
Richmond Corporation was founded 20 years ago by its president, Daniel Richmond. The company originally began as a mail-order company but has grown rapidly in recent years, in large part due to its...
-
Using the following Relational database Schema write queries to retrieve the specified information. Record Label Name Rating Ceo Group Name Main Genre Record Company Part Of Group Name Artist ID...
-
Convert the Following ER Diagram Into a Relational Database Schema. Make sure to indicate Primary and Foreign Keys. Name ID SSN Contact Employee Phone Supervisee Works On Supervisor Supervises HAS...
-
Bramble Company's standard materials cost per unit of output is $11.00 (2.50 pounds x $4.40). During July, the company purchases and uses 3,150 pounds of materials costing $16,695 in making 1,400...
Study smarter with the SolutionInn App