This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Security A has an expected rate of return of 29.8 percent and a beta of 3.1. Security B has a beta ... (Read 105 times)

faduma

  • Hero Member
  • *****
  • Posts: 528
on: Jul 11, 2018
Security A has an expected rate of return of 29.8 percent and a beta of 3.1. Security B has a beta of 1.70. If the
  Treasury bill rate is 5 percent, what is the expected rate of return for Security B?
 
  What will be an ideal response?

Question 2

Firms attempt to price bonds so that at issue they sell for the:
 
  A) face value.
  B) coupon value.
  C) firm value.
  D) same price as shares of preferred stock.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

lauravaras

  • Sr. Member
  • ****
  • Posts: 347
Reply #1 on: Jul 11, 2018
Answer to Question 1

Use A to determine the market risk premium.
.298 = .05 + 3.1(market return - .05)
.248 = (3.1  market return) - .155
.403/3.1 = .13 = market return
Return on B = .05 + 1.7(.13 - .

Answer to Question 2

A


faduma

  • Member
  • Posts: 528
Reply 2 on: Jul 11, 2018
Thanks for the timely response, appreciate it

JCABRERA33

  • Member
  • Posts: 344
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

The human body's pharmacokinetics are quite varied. Our hair holds onto drugs longer than our urine, blood, or saliva. For example, alcohol can be detected in the hair for up to 90 days after it was consumed. The same is true for marijuana, cocaine, ecstasy, heroin, methamphetamine, and nicotine.

Did you know?

People with high total cholesterol have about two times the risk for heart disease as people with ideal levels.

Did you know?

Hypertension is a silent killer because it is deadly and has no significant early symptoms. The danger from hypertension is the extra load on the heart, which can lead to hypertensive heart disease and kidney damage. This occurs without any major symptoms until the high blood pressure becomes extreme. Regular blood pressure checks are an important method of catching hypertension before it can kill you.

Did you know?

Recent studies have shown that the number of medication errors increases in relation to the number of orders that are verified per pharmacist, per work shift.

Did you know?

Vital signs (blood pressure, temperature, pulse rate, respiration rate) should be taken before any drug administration. Patients should be informed not to use tobacco or caffeine at least 30 minutes before their appointment.

Independent assortment produces 50 percent recombinants Independent assortment produces 50 percent recombinants
Allen Test: A patent ulnar artery reveals the return of palm perfusion despite radial artery compres Allen Test: A patent ulnar artery reveals the return of palm perfusion despite radial artery compres
Factors influencing pulse rate Factors influencing pulse rate
Total Fertility Rate in the United States, 1860–2008 Total Fertility Rate in the United States, 1860–2008
Expected Distribution of IQ Scores Expected Distribution of IQ Scores
Annotation of a DNA sequence containing part of the human beta-globin gene Annotation of a DNA sequence containing part of the human beta-globin gene
Video: Apicomplexan life cycle Animation

For a complete list of videos, visit our video library