FINANCE 301-MODULE-3-SLP

FINANCE 301-MODULE-3-SLP - FINANCE 301 - OVERDUE MODULE 3-...

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FINANCE 301 - OVERDUE MODULE 3- SLP DR. POLLARD A. The estimated beta coefficient for Accentia Pharmaceuticals is 0.12. What this means is that this company has a lower volatility than the market. It is less risky to invest and the return may be lower. Accentia is a fairly new company to the market and their may not be sufficient history to predict how well it would do in the future. I would look at my portfolio and re-assess if I am looking for a long or short term investment, if so, I may keep my investment down to a minimum. B. KS=KRF+B(KM-KRF) KS=6.5+.12(4.5%-6.5%) KS=6.5%+.12(2.5%) KS=6.5%+(.3%) KS=6.8% -Cost of Equity Cost of Equity is the minimum rate of return that a company must offer to its shareholders for waiting on their returns and bearing some risks. The risk depends on the market and the company specific risk. It can vary from company to company. Cost of Equity reflects the current market price of the share and based upon expected future returns, not historical returns.
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C. Best Buy – Beta 1.39
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This note was uploaded on 10/26/2011 for the course FIN 301 taught by Professor Dr.sopko during the Fall '11 term at Trident Technical College.

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FINANCE 301-MODULE-3-SLP - FINANCE 301 - OVERDUE MODULE 3-...

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