Questions from Corporate Finance

Q: In February 2017 the risk free rate was 2.97 percent

In February 2017 the risk free rate was 2.97 percent, the market risk premium was 6 percent and the beta for Twitter stock was 0.99. What is the expected return that was consistent with the systematic...

Q: The market risk premium is 6 percent, and the risk-

The market risk premium is 6 percent, and the risk-free rate is 5 percent. If the expected return on a bond is 6.5 percent, what is its beta?

Q: Explain why profit maximization is not the best goal for a company

Explain why profit maximization is not the best goal for a company. What is a better goal?

Q: David is going to purchase two stocks to form the initial holdings

David is going to purchase two stocks to form the initial holdings in his portfolio. Iron stock has an expected return of 15 percent, while Copper stock has an expected return of 20 percent. If David...

Q: When are the nominal and real interest rates equal?

When are the nominal and real interest rates equal?

Q: If the expected return on the market is 10 percent and the

If the expected return on the market is 10 percent and the risk-free rate is 4 percent, what is the expected return for a stock with a beta equal to 1.5? What is the market risk premium?

Q: Tonalli is putting together a portfolio of 10 stocks in equal proportions

Tonalli is putting together a portfolio of 10 stocks in equal proportions. What is the relative importance of the variance for each stock versus the covariance for the pairs of stocks in her portfolio...

Q: Jose is thinking about purchasing a soft drink machine and placing it

Jose is thinking about purchasing a soft drink machine and placing it in a business office. He knows that there is a 5 percent probability that someone who walks by the machine will make a purchase fr...

Q: Kate recently invested in real estate with the intention of selling the

Kate recently invested in real estate with the intention of selling the property one year from today. She has modeled the returns on that investment based on three economic scenarios. She believes tha...

Q: Given the returns and probabilities for the three possible states listed below

Given the returns and probabilities for the three possible states listed below, calculate the covariance between the returns of Stock A and Stock B. For convenience, assume that the expected returns o...