Question Details

What is Martell's expected return 



1.)   Martell Inc.'s stock has a 50% chance of producing a 30% return, a 35% chance of producing a 9% return, and a 15% chance of producing a -25% return.  What is Martell's expected return ?

a.	14.4%
b.	15.2%
c.	16.0%
d.	16.8%
e.	17.6%
2.)   Tom Skinner has $45,000 invested in a stock with a beta of 0.8 and another $55,000 invested in a stock with a beta of 1.4.  These are the only two investments in his portfolio.  What is his portfolio- beta?

a.	0.93
b.	0.98
c.	1.03
d.	1.08
e.	1.13

3.)   Magee Company's stock has a beta of 1.20, the risk-free rate is 4.50%, and the market risk premium is 5.00%.  What is Magee's required return?

a.	10.25%
b.	10.50%
c.	10.75%
d.	11.00%
e.	11.25%
4.)   Niendorf Corporation's stock has a required return of 13.00%, the risk-free rate is 7.00%, 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?

a.	14.00%
b.	15.00%
c.	16.00%
d.	17.00%
e.	18.00%
5.)   In the next year, the market risk premium, (rM - rRF), is expected to fall, while the risk-free rate, rRF, is expected to remain the same.  Given this forecast, which of the following statements is CORRECT?

a.	The required return for all stocks will fall by the same amount.
b.	The required return will fall for all stocks, but it will fall more for stocks with higher betas.
c.	The required return will fall for all stocks, but it will fall less for stocks with higher betas.
d.	The required return will increase for stocks with a beta less than 1.0 and will decrease for stocks with a beta greater than 1.0.
e.	The required return on all stocks will remain unchanged.



Business Assignment Help, Business Homework help, Business Study Help, Business Course Help