help please
these are the incorrect answers
The CAPMis an equation for and it should be correct, provided the model's assamptions are met and provided supply equals deriand tie a state of equilibrium exists). The CAPM assumes investors are and that they make investment declsions based on the return of their total portfolio and the of their total portfolio. In the CAPM, the asset's. represents its correlation with value changes of the enarket \& 1. In practice for equity valuation, the market is represented by a wuch as the S6.p500. Because valuation is forward looking it is logical to adjust the (resressed. unadjusted) beta so it more accurately predicts a beta. The beta value in a future period has been found to be on average closer to the mean value of 1.0 (the beta of awerage systematic risk) than to the value of the raw beta. The Bkume adjustment is to take a weighted average of the raw beta and 10 . with the raw (unadjusted) beta having a weight of and the beta of an average-systematic-risk security (1.0) having a weight of I soint. Another way to develop beta for use in the CAPM is to unlever beta from a benchmark (a collection of or an (industry) and re-lever beta for the subject compary NOTE. This is weful for all publich troded companies even though the book focuser wing this for non-troded comparied. The procedure takes into account the how beta is atfected bydifferences in between the subject company and the benchmark. First, the benchimark beta is unlevered to estimate the beta of the benchimark's assets (as opposed to the beta of the benchmark's equity). Unlevering removes the effect of the capital structure by the benchmark beta by (1 plus the benchmork's debtto-equity" ratio) to find unlevered beta (also called asset beta). This urievered beta will reflect just the arising from the economics of the industry. Ther, the asset beta (unlevered beta) Is re-levered to reflect the financial leverage of the subject company. Re-levering is the unlevered beta by (1 plus the subject company's debt-to-equity" ratio) to find levered beta (also called equity beta). The re-levered beta will reflect both the systematic risk of the industry the firm is in and the risk caused by financial leverage. 'Many practitioners use the after-tax debt-to-equity ratio in these computations. The after-tax debt-to-equity rotio is [[1 minus tax ratel times debt-to-equity ratio] I point The CAPM is an equation for and it should be correct, provided the moders assumptions are met and provided supply equals demand (i.e, a state of equillbrium exists). The CAPM assumes investors are ; and that they make investment decisions bared on the return of their total portfolio and the of their total portfolio, In the CAPM, the asset's represents its correlation with value changes of the market ( 1. In practice for equity valuation, the market is represented bya such as the 5SPSOO. Because valuation is forward looking it is logical to adjust the Cregressed. unadjusted) beta so it more accurafely predicts a beta. The beta value in a future period has been found to be on average closer to the mean value of 1.0 (the beta of average systematic risk) than to the value of the raw beta. The Blume adjustment is to take a weighted average of the raw beta and 1.0, with the raw (unadjusted) bet. having a weight of and the beta of an average-systematic-risk security (10) having a weight of inved as a diveount rate in valuine future canh flows from an awet, and is the level of eapected return required by The The ditference between an assets expected return and ins required returnis the asset's arset, the amet wili aspear to be comorisesthe Feoulied rate of return and the return from corvergence ef price to value. The book tivetrateg this fin section 2.4 of the chapteri with Toveta's American Depostary Receipts pricedat 3 and intrinicaty valued at 3 This reveded an undervilustion of percent and, if the price were espeted to converge to value in exacty ene year, an invetere would eaen eqiilitrum exiats. The CAPy their total portsollo and the , and that ther muke of their total portfcila in the CAPM, the ass ty valuation, the market is fepresented by a repeetentsits coirelation withivilue of anwet of the The CAPM is an equation for and it should be correct, provided the model's assumptions are met and provided suoply equals demand (lie, s state of equilibrium exists). The CAPM assumes investors are , the asset's and that they make irvestment decisions based on the return of their total portfolio and the of their total portfolio. In the CAPM, the asset's equity valuation, the market is represented by a such as the SEP500, Because valuation is forward looking, it is logical to adjust the (regressed, unadjusted) beta so it more accurately predicts a beta. The beta value in a future period has been found to be on average closer to the mean value of 1.0 (the beta of average systematic risk) than to the value of the raw beta. The Blume adjustment is to take a weighted average of the raw beta and 1.0, with the raw (unsdjusted) beta having a weight of and the beta of an averase-systematic-risk security (1.0) having a weight of Is used as a discount rate in valuing future cash flows from an assot, and is the Ievel of expected return required by the party investing in that asset (l.e, the oarty who will receive the benefit of those future cash flowil. If this percentage is higher than the investar's exbected return for the asset, the axsetwill appear to be The difference between an asset's expected return and its required return is the asset's Assumilig the imestor's value estimate is more accurate than the market's estimate (i.e, the market price), the investor's comprises the fequired rate of return and the return from comergence of price to value. The book illustrated this (in section 2.4 of the chapter) with Toyota's American Depotitary Receipts priced at 5 and intrinsically valued at $ - This revealed an undervaluation of percent and. if the price were expected to converge to value in ecactly one year, an investor would earn percent. The CAPMis an equation for and it should be correct, provided the model's assamptions are met and provided supply equals deriand tie a state of equilibrium exists). The CAPM assumes investors are and that they make investment declsions based on the return of their total portfolio and the of their total portfolio. In the CAPM, the asset's. represents its correlation with value changes of the enarket \& 1. In practice for equity valuation, the market is represented by a wuch as the S6.p500. Because valuation is forward looking it is logical to adjust the (resressed. unadjusted) beta so it more accurately predicts a beta. The beta value in a future period has been found to be on average closer to the mean value of 1.0 (the beta of awerage systematic risk) than to the value of the raw beta. The Bkume adjustment is to take a weighted average of the raw beta and 10 . with the raw (unadjusted) beta having a weight of and the beta of an average-systematic-risk security (1.0) having a weight of I soint. Another way to develop beta for use in the CAPM is to unlever beta from a benchmark (a collection of or an (industry) and re-lever beta for the subject compary NOTE. This is weful for all publich troded companies even though the book focuser wing this for non-troded comparied. The procedure takes into account the how beta is atfected bydifferences in between the subject company and the benchmark. First, the benchimark beta is unlevered to estimate the beta of the benchimark's assets (as opposed to the beta of the benchmark's equity). Unlevering removes the effect of the capital structure by the benchmark beta by (1 plus the benchmork's debtto-equity" ratio) to find unlevered beta (also called asset beta). This urievered beta will reflect just the arising from the economics of the industry. Ther, the asset beta (unlevered beta) Is re-levered to reflect the financial leverage of the subject company. Re-levering is the unlevered beta by (1 plus the subject company's debt-to-equity" ratio) to find levered beta (also called equity beta). The re-levered beta will reflect both the systematic risk of the industry the firm is in and the risk caused by financial leverage. 'Many practitioners use the after-tax debt-to-equity ratio in these computations. The after-tax debt-to-equity rotio is [[1 minus tax ratel times debt-to-equity ratio] I point The CAPM is an equation for and it should be correct, provided the moders assumptions are met and provided supply equals demand (i.e, a state of equillbrium exists). The CAPM assumes investors are ; and that they make investment decisions bared on the return of their total portfolio and the of their total portfolio, In the CAPM, the asset's represents its correlation with value changes of the market ( 1. In practice for equity valuation, the market is represented bya such as the 5SPSOO. Because valuation is forward looking it is logical to adjust the Cregressed. unadjusted) beta so it more accurafely predicts a beta. The beta value in a future period has been found to be on average closer to the mean value of 1.0 (the beta of average systematic risk) than to the value of the raw beta. The Blume adjustment is to take a weighted average of the raw beta and 1.0, with the raw (unadjusted) bet. having a weight of and the beta of an average-systematic-risk security (10) having a weight of inved as a diveount rate in valuine future canh flows from an awet, and is the level of eapected return required by The The ditference between an assets expected return and ins required returnis the asset's arset, the amet wili aspear to be comorisesthe Feoulied rate of return and the return from corvergence ef price to value. The book tivetrateg this fin section 2.4 of the chapteri with Toveta's American Depostary Receipts pricedat 3 and intrinicaty valued at 3 This reveded an undervilustion of percent and, if the price were espeted to converge to value in exacty ene year, an invetere would eaen eqiilitrum exiats. The CAPy their total portsollo and the , and that ther muke of their total portfcila in the CAPM, the ass ty valuation, the market is fepresented by a repeetentsits coirelation withivilue of anwet of the The CAPM is an equation for and it should be correct, provided the model's assumptions are met and provided suoply equals demand (lie, s state of equilibrium exists). The CAPM assumes investors are , the asset's and that they make irvestment decisions based on the return of their total portfolio and the of their total portfolio. In the CAPM, the asset's equity valuation, the market is represented by a such as the SEP500, Because valuation is forward looking, it is logical to adjust the (regressed, unadjusted) beta so it more accurately predicts a beta. The beta value in a future period has been found to be on average closer to the mean value of 1.0 (the beta of average systematic risk) than to the value of the raw beta. The Blume adjustment is to take a weighted average of the raw beta and 1.0, with the raw (unsdjusted) beta having a weight of and the beta of an averase-systematic-risk security (1.0) having a weight of Is used as a discount rate in valuing future cash flows from an assot, and is the Ievel of expected return required by the party investing in that asset (l.e, the oarty who will receive the benefit of those future cash flowil. If this percentage is higher than the investar's exbected return for the asset, the axsetwill appear to be The difference between an asset's expected return and its required return is the asset's Assumilig the imestor's value estimate is more accurate than the market's estimate (i.e, the market price), the investor's comprises the fequired rate of return and the return from comergence of price to value. The book illustrated this (in section 2.4 of the chapter) with Toyota's American Depotitary Receipts priced at 5 and intrinsically valued at $ - This revealed an undervaluation of percent and. if the price were expected to converge to value in ecactly one year, an investor would earn percent
