Problem 13.13 – Using CAPM
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
Find what the expected return on the stock will be.
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Find what the expected return on the stock will be.
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Find the beta of the stock with the given information.
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Given the company’s value, debt, and tax rate… find the debt-to-equity ratio both with and without taxes.
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Determine Caterpillar’s book debt-to-value ratio, market debt-to-value ratio, and two measures to find the cost of capital.
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Find the expected return on the market with the given information.
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Determine the relevant figure for the debt ratio and do you need to revise your measure of debt ratio up or down.
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Given the cost of capital, the debt-equity ratio, and the interest rate… find the company’s new cost of equity and WACC.
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Find the risk-free rate based on the given information.
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Given steady dividend income, last dividend, and stocks sold… determine Reliable Electric percentage cost of equity.
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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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