Question
HELP ME! PLEASE! 8-5) A stock has a required return of 12%; the risk-free rate is 5%; and the market risk premium is 3%. a.
HELP ME! PLEASE!
8-5) A stock has a required return of 12%; the risk-free rate is 5%; and the market risk premium is 3%.
a. What is the stock's beta? Round your answer to two decimal places. 2.33 (correct)
b. New stock's required rate of return will be %. Round your answer to two decimal places.
8-7) Suppose you are the money manager of a $4.54 million investment fund. The fund consists of 4 stocks with the following investments and betas:
Stock | Investment | Beta |
A | $ 300,000 | 1.50 |
B | 460,000 | - 0.50 |
C | 1,180,000 | 1.25 |
D | 2,600,000 | 0.75 |
If the market's required rate of return is 10% and the risk-free rate is 4%, what is the fund's required rate of return?
1B) Potter Industries has a bond issue outstanding with an annual coupon of 6% and a 10-year maturity. The par value of the bond is $1,000. If the going annual interest rate is 7%, what is the value of the bond? Round your answer to the nearest cent. Do not round intermediate calculations. $
Quantitative Problem: Potter Industries has a bond issue outstanding with a 6% coupon rate with semiannual payments of $30, and a 10-year maturity. The par value of the bond is $1,000. If the going annual interest rate is 7%, what is the value of the bond? Round your answer to the nearest cent. Do not round intermediate calculations. $
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