Debt - $235,697

Equity - $900,238
Beta – 1.05
Risk 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 - $178,304
Equity - $823,049
Beta – .85
Risk 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 - $879,237
Equity - $1,900,610
Beta - .85
Risk 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 - $235,697
Equity - $900,238

Beta – 1.05
Risk 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 - $178,304
Equity - $823,049
Beta – .85
Risk Free rate – 2.8%
Tax – 25%
Rm – 12%
7.97%
6.18%
10.62%
8.24%

d equity)

The y-intercept of the SML line is equal to the ______.
Beta
Expected Return
Market risk premium
Risk free rate
What is the risk free rate of the following SML?
Assume the beta of a firm in question is 1.1
E(r) = 5%+B (9%)
9%
9.90%
5%
14.90%
Which of the following is the SML equation?
Rd(1-t)
WdRd(1-t)+WsRs
Rf + B(Rm-Rf)
D1/(r-g)
The SML graphs the market risk versus the _______.
Return on the portfolio
Risk associated with the firm stock
Return on the market as a whole
Risk associated with the portfolio
What is the risk free rate of the following SML? Assume the beta of a firm in question is .6
E(r) = 4%+B (9.75%)
4.00%
5.85%

9.75%
9.85%
Expected return
Risk free rate
Beta
Return on the market
CGM
CAPM
Market valuation
Intrinsic valuation
An increase in inflation would tend to move the SML as a ____.
Pivot at the y-axis, increasing the slope
Parallel shift down
Pivot at the y-axis, decreasing the slopePivot at the y-axis, decreasing the slope
Parallel shift up
If an asset falls below the SML it is considered to be _____. (Assume we have no other information)
A good investment
A fair investment
Not enough information is available.
A poor investment
An increase in risk aversion would tend to move the SML as a ____.
Pivot at the y-axis, increasing the slope
Parallel shift up
Parallel shift down
Pivot at the y-axis, decreasing the slope
A firm with a beta of 1.2 would produce an expected return of ______. Assume the SML is equal to 5%+B
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
8.24%
8.20%
16.41%
6.90%
The slope of the line is equal to _______.
Beta
The market risk premium
The risk free rate
The expected return
The x-intercept is equal to the ______.
The SML is mathematically similar to the _____.

B(6%).
B(8%)

A public announcement about unfair labor policies is most likely to influence the:
Intrinsic value
Market value
Relative value
The announcement will not impact values
Which is not a factor included in finding the intrinsic value?
Market value
Market conditions
Expected growth
Expected earnings
The intrinsic value may change:
As a result of new information
As analysts expectations change
It will not change for an investor
As the market value changes
Both intrinsic value and market value are not often:
Necessary
An indication of an investors price
The same
Different

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- Spring '13
- Instructor
- Financial Markets, rf, Risk in finance