Rate Of Return Essay

1. Barker Corp. has a beta of 1.10, the real risk-free rate is 2.00%, investors expect a 3.00% future inflation rate, and the market risk premium is 4.70%. What is Barker's required rate of return? Answer D | | | |2010 |21.00% | |2009 |-12.50% | |2008

A Current D/V using market values: 41.% B Risk-free return (rf): 4.58% B Equity beta: 0.97 B Market risk premium (rm - rf): 7.43% B Levered cost of equity (re) at current D/V: 11.79% C Cost of debt (rd): 3.43% C Corporate tax rate (t): 41.63% D Unlevered cost of equity (re) at D/V = 0% 9.36% E Average cost of capital (r*) at D/V = 60%: 7.03% A) Current level of leverage: The current level of leverage for Marriott Corporation is 41% as it the market leverage in the exhibit 3, which

the attachment (expected rate of return) b. Based soly on expected returns, investment on CPC appears the best, for it has 9.70% expected returns, yet the investment on MORELY appears the cost, which has only 5.70% expected returns. c. Rate of return is mainly connected with the beta coefficient, which means if the rate of return is relatively higher, then the company will have higher risk. Judging from table1 in the attachment, CPC with higher rate of return(9.70%) has higher beta coefficient(1

E. Exchange rates. 11. Other things equal, diversification is most effective when A. securities' returns are uncorrelated. B. securities' returns are positively correlated. C. securities' returns are high. D. securities' returns are negatively correlated. E. both securities' returns are positively correlated and securities' returns are high. 12. Consider an investment opportunity set formed with two securities that are

The future value of an investment will increase when 
 | | |the number of years increases. | | | |the interest rate increases. | | | |both a and b. | | | |none of above. | Question 2 When the

Auctions – Objectives, Constraints, Strategy, Allocation, Execution, Evaluation, Adjustments IPS Constraints – URLIT - Unique, Regulatory/legal, Liquidity, tIme, Tax TDA vs. TEA – Higher Enders Take TEA – Higher Ending Tax rate TEA better Residence vs. Source – Pay Greater rate with

2, 3, 4, & 6) 1. Is the return on the one-year T-bill risk free? No, the return on the one-year T-bill is not risk free. Financial risk is related to the probability of earning a return less than expected and the larger the chance of earning a return far below that expected, the greater the amount of financial risk. Risk free assumes 100% probability that the investment will earn the total percent of return that is expected. 2. Calculate the expected rate of return on each of the five investment

FINANCE Question: 1. (a) Frodo Baggins has RM1,500 to invest. His investment counselor suggests an investment that pays no stated interest but will return RM2,000 at the end of 3 years. (i) (ii) What annual rate of return will Frodo earn with this investment? Frodo is considering another investment, of equal risk, that earns an annual return of 8%. Which investment should he make and why? (b) Samwise Gamgee was seriously injured in an industrial accident. He sued the responsible parties

Valuation, Risk, and Return Five years ago, Laissez-Faire Recliners issued $10,000,000 of corporate bonds with a 30-year maturity. The bonds have a coupon rate of 10.125%, pay interest semiannually, and have a par value of $1,000 per bond. The bonds are currently trading at a price of $879.625 per bond. A 25-year Treasury bond with a 6.825% coupon rate (paid semi-annual) and $1,000 par is currently selling for $975.42. In order to find the yield spread between the corporate bonds and the Treasury

------------------------------------------------- Introduction Founded in 1927, Marriott Corporation has become one of the leading food service companies in the United States. As of 1987, Marriott recorded a profit of $233 million on sales of $6.5 billion and retained a high sales growth rate of 24%. Marriott runs on three major lines of business lodging, contract services, and restaurants. Lodging division which includes 361 hotels generated 41% of 1987 sales and 51% profits. Contract services division which provides food and services