Problem 13.16 – Using CAPM
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
Find the risk-free rate based on the given information.
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Find the risk-free rate based on the given information.
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Given the expected EBIT, cost of equity, borrowing rate, tax rate, and debt, determine the current value of the firm and then recompute the firm value if the firm takes on additional debt equal to a proportion of its unlevered value.
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Plot the portfolio expected returns and the portfolio betas, then find the slope of the line.
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Given the betas and expected returns for Stock Y and Z, market risk premium, and risk-free rate… find out if the stock is priced correctly.
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Find the expected return, the portfolio weights, and its beta with the given information of stock beta, expected return, and the risk-free asset.
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With the given information, find the portfolio expected return, the variance, the standard deviation, expected risk premium, the approximate and exact expected real returns, and the approximate and exact expected real risk premiums.
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Given the information from the table on Stock A, B, and C… fill in the rest of the table.
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Given the information on the portfolio, figure out how much you’d invest in Stock Y and the beta.
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Find the expected return on the market and the risk-free rate.
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Find the expected return on stock A and B, then find the expected market risk premium.
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