Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Attahced is the questions that I need solution for. 1.)You bought a stock one year ago for $49.76 per share and sold it today for

image text in transcribed

Attahced is the questions that I need solution for.

image text in transcribed 1.)You bought a stock one year ago for $49.76 per share and sold it today for $58.73per share. It paid a $1.72 per share dividend today. a. What was your realized return? b. How much of the return came from dividend yield and how much came from capital gain? 2.) You bought a stock one year ago for $50.02per share and sold it today for $45.46per share. It paid a $1.73per share dividend today. a. What was your realized return? b. How much of the return came from dividend yield and how much came from capital gain? 3.) Suppose the market risk premium is 4 %and the risk-free interest rate is 5 % Using the data in the table, Starbuck Hershey Autodesk s Beta 0.08 0.33 1.96 , calculate the expected return of investing in a. Starbucks' stock. b. Hershey's stock. c. Autodesk's stock. 4.) You own three stocks: 600 shares of Apple Computer, 10,000 shares of Cisco Systems, and 5,000 shares of Colgate-Palmolive. The current share prices and expected returns of Apple, Cisco, and Colgate-Palmolive are, respectively, $ 526, $24, $98 and 12%, 10%, 8%. a. What are the portfolio weights of the three stocks in your portfolio? b. What is the expected return of your portfolio? c. Suppose the price of Apple stock goes up by $20, Cisco rises by $3, and Colgate-Palmolive falls by $14. What are the new portfolio weights? d. Assuming the stocks' expected returns remain the same, what is the expected return of the portfolio at the new prices? 5.) Suppose Autodesk stock has a beta of 2.15, whereas Costco stock has a beta of 0.69. If the risk-free interest rate is 4.5% and the expected return of the market portfolio is 13.0%, what is the expected return of a portfolio that consists of 70% Autodesk stock and 30% Costco stock, according to the CAPM?The expected return is nothing%. (Round to two decimal places.) 6.) Unida Systems has 46 million shares outstanding trading for $12 per share. In addition, Unida has $85 million in outstanding debt. Suppose Unida's equity cost of capital is 13%, its debt cost of capital is 7%, and the corporate tax rate is 38%. a. What is Unida's unlevered cost of capital? b. What is Unida's after-tax debt cost of capital? c. What is Unida's weighted average cost of capital? 7.) You would like to estimate the weighted average cost of capital for a new airline business. Based on its industry asset beta, you have already estimated an unlevered cost of capital for the firm of 10%. However, the new business will be 29% debt financed, and you anticipate its debt cost of capital will be 7%. If its corporate tax rate is 31%, what is your estimate of its WACC? The equity cost of capital is nothing%. (Round to one decimal place.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Investments

Authors: Zvi Bodie, Alex Kane, Alan Marcus

11th Edition

1260288390, 978-1260288391

More Books

Students also viewed these Finance questions

Question

If f(x) = log b x and f(3) = 2, find f(9).

Answered: 1 week ago