given a expected rate of return on an stock with 18%. asume t-bill. calculate beta

and deviation for each investment urn on a stock with Beta=0.8. Calculate the expected rate of return and standard deviation for c. Which investment would you prefer? (3 points) 2. What are the risk premium and the expected rate of return on as Assume a T-Bill rate of 5% and a market risk premium of 107. (1 point) Given an expected rate of return on a stock with 18%. Assume a a market risk of 25%. Calculate Bota. (1 point) 4. River Cruises is all-equity-financed Suppose it now issues $45 Interest rate of 10% and uses the proceeds to repurchase 45,000 she the firm pays no taxes and that date face has no impact on firm van showed below by selecting values per each scenario and accu earings per share and share return vary with operating income anter 18%. Assume a T-Bal rate of 5% and it now issues $ 450,000 of debt at an hase 45,000 shares. Assume that impact on firm value. Rework nario and account to show how operating income after the financing. Current Data Number of shares 100,000 Price per share $10 Market value of shares $1 million Slump $100,000 Outcomes Normal $150,000 Boom $200,000 State of the Economy Profits before interest Interest Equity earnings Earnings per share Return on shares (5 points) 5. Dunet is financed 40% by debt yielding 8%. Investors require a return of 18% on Donet's equity. a. What is the company's weighted average cost of capital if the corporate tax rate is 35%? b. What would be the company's cost of capital if it were exempted from corporate tax? (2 points) 6. Consider the following two scenarios for the economy and the returns in each scenario for the market portfolio, an aggressive stock A, and a defensive stock D. Rate of Return Scenario Market Aggressive Stock A Defensive Stock D Bust -10% -12% -8%