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i need fast soltion The outcome of a regression of Buhoo monthly stock returns against market monthly returns is as follow: ReturnsBuhoo = -1.4% +
i need fast soltion
The outcome of a regression of Buhoo monthly stock returns against market monthly returns is as follow:
ReturnsBuhoo = -1.4% + 0.75 (ReturnsS&P 500)
If the standard error of the regression beta is 0.5. Estimate the lower bound for the regression beta at a 95% confidence interval?
Answer for part 1
Estimate the upper bound for the regression beta at a 95% confidence interval?
Answer for part 2
If the average riskfree rate during the regression period was 5%, estimate Jensens alpha for Buhoo, in annualized terms.
Answer for part 3
During the period of the regression, Buhoo was in Fashion business ONLY and had an average debt to equity ratio of 30%. What is the business risk for the fashion business assuming a tax rate of 40%?
Answer for part 4
Buhoo is considering investing in the magazine business. The average beta of firms specializing in the magazine business is 1.2, and these firms have an average debt to equity ratio of 30%; they face an average tax rate of 35%. Estimate the business risk (unlevered beta) for the magazine business.
Answer for part 5
Buhoo expects that half its future revenues and earnings will come from magazine business. Estimate the unlevered beta for Buhoo looking forward (that is for being both the fashion and the magazine businesses).
Answer for part 6
If Buhoo currently has 6m shares at a 1$ per share and 2m$ debt, and plans to maintain the same debt to equity ratio for the foreseeable future, estimate the beta for Buhoo looking forward (that is for being in the fashion and magazine businesses).
Answer for part 7
If the market risk premium is 4%, and the current risk-free rate is 3%, estimate the cost of equity for Buhoo.
Answer for part 8
If Buhoo's is subject to 40% tax rate and its bonds are rated A. The default spread for A rated bonds is 1.8%. Estimate the after tax cost of debt for Buhoo.
Answer for part 9
If Buhoo maintains its debt to equity ratio mentioned in part 7 above, estimate the weighted average cost of capital for Buhoo.
Answer for part 10
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