Question
1. An individual has $15,000 invested in a stock with a beta of 0.4 and another $60,000 invested in a stock with a beta of
1. An individual has $15,000 invested in a stock with a beta of 0.4 and another $60,000 invested in a stock with a beta of 2.3. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.
2.A Treasury bond that matures in 10 years has a yield of 5.00%. A 10-year corporate bond has a yield of 7.00%. Assume that the liquidity premium on the corporate bond is 0.30%. What is the default risk premium on the corporate bond? Round your answer to two decimal places.
3.Given the following information, determine the beta coefficient for Stock L that is consistent with equilibrium: = 15.5%; rRF = 1.5%; rM = 11.5%. Round your answer to two decimal places.
4. Carnes Cosmetics Co.'s stock price is $44, and it recently paid a $1.25 dividend. This dividend is expected to grow by 29% for the next 3 years, then grow forever at a constant rate, g; and rs = 13%. At what constant rate is the stock expected to grow after Year 3? Do not round intermediate calculations. Round your answer to two decimal places.
5.Tresnan Brothers is expected to pay a $2.10 per share dividend at the end of the year (i.e., D1 = $2.10). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, rs, is 14%. What is the stock's current value per share? Round your answer to the nearest cent.
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