Questions from Corporate Finance

Q: Suppose the market risk premium is 5% and the risk-

Suppose the market risk premium is 5% and the risk-free interest rate is 4%. Using the data in Table 10.6, calculate the expected return of investing in a. Starbucks’ stock. b. Hersh...

Q: Given the results to Problem 35, why don’t all investors hold

Given the results to Problem 35, why don’t all investors hold Autodesk’s stock rather than Hershey’s stock? Data from Problem 35: Suppose the market risk premium is 5% and the risk-free interest rat...

Q: Suppose the market risk premium is 6.5% and the

Suppose the market risk premium is 6.5% and the risk-free interest rate is 5%. Calculate the cost of capital of investing in a project with a beta of 1.2.

Q: State whether each of the following is inconsistent with an efficient capital

State whether each of the following is inconsistent with an efficient capital market, the CAPM, or both: a. A security with only diversifiable risk has an expected return that exceeds the risk-free in...

Q: You bought a stock one year ago for $50 per share

You bought a stock one year ago for $50 per share and sold it today for $55 per share. It paid a $1 per share dividend today. a. What was your realized return? b. How much of the return came from divi...

Q: Repeat Problem 4 assuming that the stock fell $5 to $

Repeat Problem 4 assuming that the stock fell $5 to $45 instead. a. Is your capital gain different? Why or why not? b. Is your dividend yield different? Why or why not? Data from Problem 4: You boug...

Q: Using the data in the following table, calculate the return for

Using the data in the following table, calculate the return for investing in Boeing stock (BA) from January 2, 2008, to January 2, 2009, and also from January 3, 2011, to January 3, 2012, assuming all...

Q: Nokela Industries purchases a $40 million cyclo-converter. The

Nokela Industries purchases a $40 million cyclo-converter. The cyclo-converter will be depreciated by $10 million per year over four years, starting this year. Suppose Nokela’s tax rate is 40%. a. Wha...

Q: Assume that historical returns and future returns are independently and identically distributed

Assume that historical returns and future returns are independently and identically distributed and drawn from the same distribution. a. Calculate the 95% confidence intervals for the expected annual...

Q: Using the data in Table 10.2, a.

Using the data in Table 10.2, a. What was the average annual return of Microsoft stock from 2002–2014? b. What was the annual volatility for Microsoft stock from 2002â€
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