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1. Krysy, Inc. has a beta of 1.4, the risk-free rate is 3.25%, and the expected return on the market is 9.35%. What is the
1. Krysy, Inc. has a beta of 1.4, the risk-free rate is 3.25%, and the expected return on the market is 9.35%. What is the expected return for Krysy, Inc? (Your answer must be in the form of 1.23% or 11.23%.) Use the CAPM to calculate this. (Your answer must be in the 2. What is the market risk premium implied in Question 1 above? form of 1.23% or 11.23%.). 3. Is the expected return on shares of stock in Krysy, Inc. in Question 1 Higher or Lower or Equal to the expected return on the market portfolio? 4. Markus purchased stock in a start-up company at a price of $88 per share one year ago. This company did not do well initially, but showed some longer-term promise, so it was acquired by JP Morgan at a price of $11 per share. What is Marcus's return on his investment? (Your answer must be in the form of 1.23% or 11.23%.). 5. You invested $100 in the Ishares Fund one year ago. It paid a dividend of $4 today, and you immediately sold your shares for $100. What was your capital gains yield on this investment? 6. Maria purchased 100 shares of Carter, Inc. stock for $100 per share one year ago. She just received a dividend of $4 per share and then sold the shares for $116 per share. What was her dividend yield? 7. Assume Bruno Corp. has a market value of $4 Billion of equity and a market value of $19.8 billion of debt. What is the weight for equity that is used for calculating the WACC? (Your answer must be in the form of 1.23% or 11.23%.)
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