CHAPTER 14 PROBLEMS

FINANCE  Investment Analysis and Portfolio Management CHAPTER 14 PROBLEMS

3 Given Hitech's beta of 1.75 and a risk free rate of 7 percent, what is the expected rate of   return, assuming     
    a. a 15 percent market return?  
       b. a 10 percent market return? 


   5 What is the implied growth duration of Kayleigh Industries given the following  ： 


6. Lauren Industries has an 18 percent annual growth rate compared to the market rate of 8   percent. If the market multiple is 18,determine P/E ratios for Lauren Industries, assuming   its beta is 1.0 and you feel it can maintain its superior growth rate for      
   a. the next 10 years  
 b. the next 5 years    


7. You are given the following information about two computer software firms and the S&P   Industrials   Company A;            Company B;            S&P Industrials
 P/E ratio----30.0;            27.0;            18.0  
 Expected annual growth rate----0.18;            0.15;            0.07  
Dividend yield----0.00;            0.01;            0.02   
a. Compute the growth duration of each company stock relative to the S&P Industrials.
  b. Compute the growth duration of Company A relative to Company B. 
  c. Given these growth durations, what determines your investment decision?