What is the beta for Ford Motors Corporation? Briefly interpret what the number means. What is the unit of it? Percentage? Dollar? For instance, if you find it to be 0.8, is it 0.8%, 80%, $0.8, or something else? What do we compare it to, to determine the riskiness of Ford Motors Company's stocks?
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- An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?In an economy where the risk-free interest rate is 19% and the expected return of the market is 25%, the beta coefficients of A, B, C and D stocks and the expected returns announced by the companies are as follows. According to the Financial (Capital) Assets Pricing Model c) Calculate the expected return rates of the shares.d) Determine which stocks can be invested by comparing the expected return announced by the company with the expected return you calculated.Aluminum maker Alcoa has a beta of about 1.99, whereas Hormel Foods has a beta of 0.43. If the expected excess return of the market portfolio is 3%, which of these firms has a higher equity cost of capital, and how much higher is it? Alcoa's equity cost of capital is __ % ? (Round to two decimal places.)
- The following table is an analyst's best guess for the likelihood of various states of the economy next year and the corresponding return on the stock of EFG Corp. State of the Expected Return Economy Probability (%) Ideal 0.2 20.0 Good 0.4 15.0 Fair 0.3 8.0 Poor 0.1 -10.0 What is the expected percentage rate of return on EFG Corp. stock? Group of answer choices 3.4 10.4 10.8 11.4 not enough informationThe stock of a given corporation has a 25% chance of producing a 16% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firms expected rate of return and standard deviation?You were analyzing a stock and came up with the following probability distribution of the stock returns. What is the coefficient of variation on the company's stock?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. State of the Economy Probability of State Occurring Stock's Expected Return Boom 25.00% 24.15% Normal 46.00% 17.40% Recession 29.00% 6.20% Group of answer choices
- You are considering purchasing shares in a company that has a beta of 0.9. The average return for the S&P 500 is 11%, and the average return for US Treasury bills has been 2%. Based on the CAPM, what is your expected return for the stock?Aluminum maker Alcoa has a beta of about 1.8, whereas Hormel Foods has a beta of 0.41. If the expected excess return of the market portfolio is 4%, which of these firms has a higher equity cost of capital, and how much higher is it? Alcoa's equity cost of capital is __ % ? (Round to two decimal places.) Hormel's equity cost of capital is __ % ? (Round to two decimal places.) Therefore, __ Alcoa's/Hormel's ? has the higher equity cost of capital __ ? by percentige points. (Select from the drop-down menus and round to two decimal places.)You have been asked to calculate the required return for a stock that you are considering investing in. You recently looked up the risk-free rate (as measured by Treasury bonds) and found it to be 3%. You also looked up the current market return of the S&P 500 and found it to be 14. If the firm has a beta of 1.2, what is its required return?
- What is the value of a common stock if: a. the firm's earnings and dividends are growing annually at 4 percent, the current dividend is $1.32, and investors require 8 percent return on investments in common stock? b. What is the value of this stock if you add risk to the analysis and the firm's beta coefficient is 0.8, the risk-free rate is 1.5 percent, and the return on the market is 8.5 percent? c. If the price of the stock is $35, what is the rate of return offered by the stock? Should the investor acquire this stock?Cooley Computer Repair and Service Company's stock has a beta of 1.28, the risk-free rate is 2.25%, and the market risk premium is 5.50%. What is the firm's required rate of return?You were analyzing a stock and came up with the following probability distribution of the stock returns. What is the coefficient of variation on the company's stock?Round your answer to two decimal places. For example, if your answer is $345.6671 round as 345.67 and if your answer is .05718 or 5.7182% round as 5.72. State of the Economy Probability of State Occurring Stock's Expected Return Boom 20.00% 22.15% Normal 46.00% 17.35% Recession 34.00% 9.50%
