FundRobot » Investment Fund » Finance Homework Help!!!! Immediately!!!!!!?

Old   #1 (permalink)
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Default Finance Homework Help!!!! Immediately!!!!!!?

Please help, even if its just one problem!!! thank youu

1. T. Martell Inc.'s stock has a 50% chance of producing a 50% return, a 35% chance of producing a 13% return, and a 15% chance of producing a -25% return. What is Martell's expected return?

Magee Company's stock has a beta of 1.25, the risk-free rate is 6.50%, and the market risk premium is 4.50%. What is Magee's required rate of return?

3. Miller Inc. is considering a capital budgeting project that has an expected return of 10% and a standard deviation of 10%. What is the project's coefficient of variation?

4. Niendorf Corporation's stock has a required return of 14.50%, the risk-free rate is 8.00%, and the market risk premium is 4.00%. Now suppose there is a shift in investor risk aversion, and the market risk premium increases by 2.00%. What is Niendorf's new required return?

5. Tom Skinner has $40,000 invested in a stock with a beta of 1 and another $60,000 invested in a stock with a beta of 1.3. These are the only two investments in his portfolio. What is his portfolio's beta?

6. The real risk-free rate is 4.50%, investors expect a 2.50% future inflation rate, the market risk premium is 5.00%, and Krogh Enterprises has a beta of 1.40. What is the required rate of return on Krogh's stock?

7. Assume that you are the portfolio manager of the Delaware Fund, a $4 million mutual fund that contains the following stocks:

StockAmount Beta
A $500,000 1.30
B $500,000 0.50
C $500,000 1.00
D $2,500,000 0.75

The required rate of return in the market is 14.00% and the risk-free rate is 6.00%. What rate of return should investors expect (and require) on their investment in this fund?

8. An analyst believes that economic conditions during the next year will be either Strong, Normal, or Weak, and she thinks that the Corrigan Company's returns will have the following probability distribution. What's the standard deviation of Corrigan's returns as estimated by this analyst?
Conditions ProbabilityReturn
Strong 30% 25%
Normal 40 20
Weak 30 -10

9. An investor has a 2-stock portfolio with $55,000 invested in Palmer Manufacturing and $45,000 in Nickles Corporation. Palmer's beta is 1.30 and Nickles' beta is 1.10. What is the portfolio's beta?

10. Apex Roofing's stock has a beta of 0.90, its required return is 13.50%, and the risk-free rate is 5.00%. What is the required rate of return on the stock market? (Hint: First find the market risk premium.)

sketeimmipt is offline   Reply With Quote
Old   #2 (permalink)
Senior Member
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Default Finance Homework Help!!!! Immediately!!!!!!?

You'd have had better luck if you'd posted these separately...

10. Use CAPM...E(r) = RFR + (Rmkt - RFR)...
0.1350 = 0.05 + 0.90(Rmkt - 0.05)
0.0850 = 0.90Rmkt - 0.045
0.13 = 0.9Rmkt
Rmkt = 0.14444, or about 14.44%
Erylfa is offline   Reply With Quote


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