Questions from Corporate Finance

Q: Describe some of the criticisms of the CAPM, including Roll’s critique

Describe some of the criticisms of the CAPM, including Roll’s critique.

Q: Briefly describe the strengths and weaknesses of the Fama-French model

Briefly describe the strengths and weaknesses of the Fama-French model and the APT.

Q: Why is the CAPM called a single-factor model?

Why is the CAPM called a single-factor model?

Q: Jackie borrowed $1,000 at the risk‐free rate

Jackie borrowed $1,000 at the risk‐free rate of 6 percent. She invested the borrowed money and her own money of $2,500 in a portfolio with a 15‐percent rate of return and a 25‐percent standard deviati...

Q: Calculate the missing values for the following five efficient portfolios. The

Calculate the missing values for the following five efficient portfolios. The expected return on the market is 8 percent, with a standard deviation of 5 percent, and the risk‐free ra...

Q: TrenStar Inc. obtained the following incomplete information from ABC Company and

TrenStar Inc. obtained the following incomplete information from ABC Company and has given you the task of completing the table.

Q: Stock FM has a standard deviation of 28 percent and a correlation

Stock FM has a standard deviation of 28 percent and a correlation coefficient of 0.7 with market returns. The standard deviation of market return is 16 percent, and the expected return is 13.5 percent...

Q: Estimate the beta of the following stock: market risk premium =

Estimate the beta of the following stock: market risk premium = 25 percent, RF = 6 percent, P0 = $10, expected dividend at the end of the year = $2.50, P = $12.50 . Assume the market is in equilibrium...

Q: You are valuing the Vancouver Rain‐Making Company (VRM)

You are valuing the Vancouver Rain‐Making Company (VRM) and need to calculate the following: a. Required rate of return (assume the market risk premium is 8 percent, the risk‐free rate is 3 percent, a...

Q: Which of the following are examples of systematic (market) risks

Which of the following are examples of systematic (market) risks? Which are examples of unsystematic (unique) risks? a. Inflation risk b. CFO’ s fraudulent activities c. Changes in interest rates d. P...