The Fama and French evidence that high book to market firms outperform low book to market firms even after adjusting for beta means _________. A. high book to market firms are underpriced B. low book to market firms are underpriced C. either high book to market firms are underpriced or the...
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Stock A has expected return 14%, beta of 0.8. If the expected market return is 14% and the risk-free rate is 7%, then whether the stock is: 1. Overpriced 2. Under-priced 3. Correctly priced 4. Can not be determined A stock has an expected return of 11 percent, the risk-free...
5. Fama and French (1991) and Reinganum (1988) found that firms with __________ market/book ratios had higher stock returns. A. high B. low C. medium D. paired
The positively sloped linear function which illustrates the relationship between an asset's expected return and its beta coefficient is the: 1. reward-to-risk ratio. 2. portfolio weight. 3. portfolio risk. 4. security market line. 5. market risk premium.
If the expected return on the market portfolio is estimated to be 19%, the risk-free rate of interest is 9%, and the beta of asset i is 0.40, what is the expected return on asset i using CAPM model? 1. 0.09 2. 0.20 3. 0.13 4. 0.05 5. -0.022
Qd = 5,000 - 15P + 50A + 3Px - 4I, (2, 117) (2.7) (15) (2) (3) where Qd = Quantity Demanded, P = Good Price, A = Advertising Expenditures, Px = Price of a Competitive Good, A = Advertising Expenditures, I = Average Monthly Income, and the Standard Errors of the...
20. Four months ago, you purchased 1,500 shares of Lakeside Bank stock for $11.20 a share. You have received dividend payments equal to $0.25 a share. Today, you sold all of your shares for $8.60 a share. What is your total dollar return on this investment?
Consider the following two investment alternatives. First, a risky portfolio that pays 20% rate of return with a probability of 60% or 5% with a probability of 40%. Second, a treasury that pays 6%. If you invest $50,000 in the risky portfolio, your expected one-year profit would be
You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of treasury bills that pay 5% and a risky portfolio, P, constructed with 2 risky securities X and Y. The weight of X and Y in P are 60% and 40% respectively. X has an expected rate of return of 14%...
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1. Can you help me with this valuation problem?: Imagine that you are trying to evaluate the economics of purchasing an automobile. You expect the car to provide annual after-tax cash benefits of $1,200 at the end of each year and assume that you can sell the car for after-tax proceeds of $5,000 at the end of the planned 5-year ownership period. All funds for purchasing the car will be drawn from your savings, which are currently earning 6% after taxes.
- a.Identify the cash flows, their timing, and the required return applicable to valuing the car.
- b.What is the maximum price you would be willing to pay to acquire the car? Explain.
2. How do you calculate the before tax-cost of the Sony bond and the after-tax cost of the Sony bond given the following information?:
- David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:
- Sony bond
- Par value $1,000 Coupon interest rate 6% Tax bracket 20%
- Cost $930 Years to maturity 10