Questions from Corporate Finance

Q: GTB, Inc., has a 34 percent tax rate and has

GTB, Inc., has a 34 percent tax rate and has $100 million in assets, currently financed entirely with equity. Equity is worth $7 per share, and book value of equity is equal to market value of equity....

Q: Consider that you have three stocks in your portfolio and wish to

Consider that you have three stocks in your portfolio and wish to add a fourth. You want to know if the fourth stock will make the portfolio riskier or less risky. Compare and contrast how this would...

Q: Describe how different allocations between the risk-free security and the

Describe how different allocations between the risk-free security and the market portfolio can achieve any level of market risk desired. Give examples of a portfolio from a person who is very risk ave...

Q: Note from Table 10-2 that some technology-oriented firms

Note from Table 10-2 that some technology-oriented firms (Apple) in the Dow Jones Industrial Average have high market risk while others (Intel and Verizon) have low market risk. How do you explain thi...

Q: Explain how the concept of a positive risk-return relationship breaks

Explain how the concept of a positive risk-return relationship breaks down if you can systematically find stocks that are overvalued and undervalued.

Q: Why do most investment scams conducted over the Internet and e-

Why do most investment scams conducted over the Internet and e-mail involve penny stocks instead of S&P 500 Index stocks?

Q: Describe a stock market bubble. Can a bubble occur in a

Describe a stock market bubble. Can a bubble occur in a single stock?

Q: If stock prices are not strong-form efficient, then what

If stock prices are not strong-form efficient, then what might be the price reaction to a firm announcing a stock buyback? Explain.

Q: Find a beta estimate from three different sources for General Electric (

Find a beta estimate from three different sources for General Electric (GE). Compare these three values. Why might they be different?

Q: If you were to compute beta yourself, what choices would you

If you were to compute beta yourself, what choices would you make regarding the market portfolio, the holding period for the returns (daily, weekly, etc.), and the number of returns? Justify your choi...