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I need answers You ran a regression of the monthly returns of EKH company against the monthly returns of the S&P 500 index the following
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You ran a regression of the monthly returns of EKH company against the monthly returns of the S&P 500 index the following outcome was obtained REKH=-0.30%+1.7 Returns S&P 500 The current one-year T-bill is 4.6% and the current thirty-year T-bond is 6.5%. the firm has 260 million shares shlling at 25$ a share. The market risk premium is 6.5% a) What is the expected return on this stock over the next year? b) If the purpose of the expected return was to get a discount rate for a 30-year project, would it change? c) If the stock had a Jensen alpha of -0.10% over the period of regression, estimate the monthly risk-free rate during this period d) The firm has a D/E ratio of 3% and faces a tax rate of 40%. It is planning to issue $2 billion in new debt to acquire a new business that will have the same level of risk as the existing business. What will the beta be after the acquisition? You ran a regression of the monthly returns of EKH company against the monthly returns of the S&P 500 index the following outcome was obtained REKH=-0.30%+1.7 Returns S&P 500 The current one-year T-bill is 4.6% and the current thirty-year T-bond is 6.5%. the firm has 260 million shares shlling at 25$ a share. The market risk premium is 6.5% a) What is the expected return on this stock over the next year? b) If the purpose of the expected return was to get a discount rate for a 30-year project, would it change? c) If the stock had a Jensen alpha of -0.10% over the period of regression, estimate the monthly risk-free rate during this period d) The firm has a D/E ratio of 3% and faces a tax rate of 40%. It is planning to issue $2 billion in new debt to acquire a new business that will have the same level of risk as the existing business. What will the beta be after the acquisitionStep by Step Solution
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