Robert Balik and Carol Kiefer are senior vice presidents of the Mutual of Chicago Insurance Company. They are codirectors of the companys pension fund management division, with Balik having responsibility for fixed-income securities (primarily bonds) and Kiefer being responsible for equity investments. A major new client, the California League of Cities, has requested that Mutual of Chicago present an investment seminar to the mayors of the represented cities; Balik and Kiefer, who will make the actual presentation, have asked you to help them.

To illustrate the common stock valuation process, Balik and Kiefer have asked you to analyze the Home Depot Company (HD). They picked this company because it is an established, mature company that the audience knows.

You recently joined the firm as an equity analyst. Your job is to help Balik and Kiefer evaluate investment opportunities.

Please Solve all of the colored boxes! (The blue boxes should be the final answers.)

Please slove the colored cells!

please solve the colored cells! Thanks!

so Guations and Anwwers 51 1. What io market riak premium (uning Syear time frame|? S4 2. Uine CAPM whin in the expected return for Heme Depot? 0.008 52 34 39 . 62 63 64 65 66 67 67 69 69 70 Yow hore wo ereure the ingors and formiles for this ane on your own. 71. 5. Weuld you rocommend ho as an levenment to Balli and Keiler? 72. A. Yes becase its intrinsk value is igher than ins stock price 73. i. Yes, becave its sock proc is Nigher than its merinok value 74 C.No, becase its intrinele value in bigher than its stsck price