Unformatted text preview: $2,000 .10 $4,000 .50 $18,000 .30 $6,000 .30 $27,000 .40 $10,000 .20 $15,000 4. Builtrite stock has a beta of 1.2. The current risk-free rate is 6% and the overall market average return is 14%. Calculate the ‘fair rate of return’ for Builtrite stock and comment on why the rate is fair. 5. The average dollar profit for a Builtrite investment has been calculated at $130,000 with a standard deviation of $30,000. What is the probability of the next investment having a profit of greater than $175,000. What is the probability of the investment returning between $145,000 and $175,000? The CFO will get a bonus if the profit is in the top 15% of all investment profits, what is the dollar amount of that profit?...
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- Fall '14
- Net Present Value, Internal rate of return, PROB, Builtrite