Debt - $235,697Equity - $900,238Beta – 1.05Risk Free rate – 3.2%Tax – 25%20.75%79.25%16.41%83.59%What is the cost of equity provided the following information?Debt - $178,304Equity - $823,049Beta – .85Risk Free rate – 2.8%Tax – 25%MRP – 12%13.00%9.75%7.97%10.62%Provided the following information what is the WACC?Rd – 3.5%Rs –11%T – 25%Wd – 70%Ws – 30%5.14%8.49%6.76%5.40%What is the weight of debt provided the following information?Debt - $879,237Equity - $1,900,610Beta - .85Risk Free rate - 2.7%Tax – 25%31.63%25.76%74.24%68.37%Provided the following information what is the after tax cost of equity?Rd – 3.7%Rs –9%T – 28%Wd – 35%9.32%6.48%2.66%9.00%What is the cost of equity provided the following information?Debt - $235,697Equity - $900,238Beta – 1.05Risk Free rate – 3.2%Tax – 25%MRP – 10%7.76%10.34%10.28%13.70%What is the cost of equity provided the following information?Debt - $178,304Equity - $823,049Beta – .85Risk Free rate – 2.8%Tax – 25%Rm – 12%7.97%6.18%10.62%8.24%

The y-intercept of the SML line is equal to the ______.BetaExpected ReturnMarket risk premiumRisk free rateWhat is the risk free rate of the following SML? Assume the beta of a firm in question is 1.1E(r) = 5%+B (9%) 9%9.90%5%14.90%Which of the following is the SML equation?Rd(1-t)WdRd(1-t)+WsRsRf + B(Rm-Rf)D1/(r-g)The SML graphs the market risk versus the _______. Return on the portfolioRisk associated with the firm stockReturn on the market as a wholeRisk associated with the portfolioWhat is the risk free rate of the following SML? Assume the beta of a firm in question is .6E(r) = 4%+B (9.75%) 4.00%5.85%9.75%9.85%Expected returnRisk free rateBetaReturn on the marketCGMCAPMMarket valuationIntrinsic valuationAn increase in inflation would tend to move the SML as a ____.Pivot at the y-axis, increasing the slopeParallel shift downPivot at the y-axis, decreasing the slopePivot at the y-axis, decreasing the slopeParallel shift upIf an asset falls below the SML it is considered to be _____. (Assume we have no other information)A good investmentA fair investmentNot enough information is available.A poor investmentAn increase in risk aversion would tend to move the SML as a ____.Pivot at the y-axis, increasing the slopeParallel shift upParallel shift downPivot at the y-axis, decreasing the slopeA firm with a beta of 1.2 would produce an expected return of ______. Assume the SML is equal to 5%+B(6%).12.20%10.62%7.25%6.18%A firm with a beta of .65 would produce an expected return of ______. Assume the SML is equal to 3%+B(8%)8.24%8.20%16.41%6.90%The slope of the line is equal to _______.BetaThe market risk premiumThe risk free rateThe expected returnThe x-intercept is equal to the ______. The SML is mathematically similar to the _____.

A public announcement about unfair labor policies is most likely to influence the:Intrinsic valueMarket valueRelative valueThe announcement will not impact valuesWhich is not a factor included in finding the intrinsic value?Market valueMarket conditionsExpected growthExpected earningsThe intrinsic value may change:As a result of new informationAs analysts expectations changeIt will not change for an investorAs the market value changesBoth intrinsic value and market value are not often:NecessaryAn indication of an investors priceThe sameDifferent

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- Summer '13
- SMITH
- Financial Markets, Weighted average cost of capital, Risk in finance