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5.1. Consider the information provided below which relates to a security analyst's expected return on two stocks for two particular market returns at the beginning
5.1. Consider the information provided below which relates to a security analyst's expected return on two stocks for two particular market returns at the beginning and the end of a trading week in January 2023. INFORMATION REQUIRED: 5 5.1.1. Calculate the betas of the two stocks? (4 marks) 5.1.2. What is the expected rate of return on each stock if the market return is equally likely to be 8% or 20% ? (4 marks) 5.2. You are a consultant to a large manufacturing company that is considering an investment project with the following net after-tax cash flows: REQUIRED: The project's beta is 1.7. If the risk-free rate rr is 9% and the expected market return E(Rm) is 19% what is the net present value of the project? (7 marks)
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