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Question
| Year | Risk-free Return | Market Return | Wyatt Oil Return | Market Excess Return | Wyatt Oil Excess Return | Beta |
| 2007 | 3.0% | 6.0% | 5.5% | 3.0% | 2.5% | 0.833 |
| 2008 | 1.5% | -38.5% | -32.6% | .40% | -34.1% | 0.853 |
| 2009 | 1.0% | 22.5% | 19.6% | 21.5% | 18.6% | 0.865 |
The Market's average historical return is closest to:
A) -2.50%
B) -3.33%
C) -4.33%
D) -5.17%
Answer
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Related questions
Q:
Nielson Motors has a debt-equity ratio of 1.8, an equity beta of 1.6, and a debt beta of 0.20. It is currently evaluating the following projects, none of which would change Nielson's volatility. Project
1
2
3
4
5 Investment
100
75
120
60
80 NPV
23
12
18
15
14 (All amounts are in $millions.)
In order for Nielson Motor's to be willing to invest, project 5 must have an NPV greater than:
A) $10.0 million
B) $12.5 million
C) $18.0 million
D) $22.5 million
Q:
Nielson Motors has a debt-equity ratio of 1.8, an equity beta of 1.6, and a debt beta of 0.20. It is currently evaluating the following projects, none of which would change Nielson's volatility. Project
1
2
3
4
5 Investment
100
75
120
60
80 NPV
23
12
18
15
14 (All amounts are in $millions.)
The total debt overhang associated with accepting project 4, is closest to:
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Q:
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Q:
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Q:
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Q:
Suppose all possible investment opportunities in the world are limited to the four stocks list in the table below:StockPrice per ShareNumber of Shares Outstanding (Millions)Taggart Transcontinental$15.6025Rearden Metal$13.0045Wyatt Oil$29.2510Nielson Motors$26.2526 Suppose that you have invested $100,000 invested in the market portfolio and that the stock price of Taggart Transcontinental suddenly drops to $7.80 per share. Which of the following trades would you need to make in order to maintain your investment in the market portfolio: 1. Buy approximately 1,140 shares of Taggart Transcontinental 2. Sell approximately 256 shares of Rearden Metal 3. Sell approximately 57 shares of Wyatt Oil 4. Sell approximately 148 shares of Nielson Motors A) 1 only B) 2 only C) 2, 3, and 4 only D) 1, 2, 3, and 4 E) None of the above
Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
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Q:
The excess return if the difference between the average return on a security and the average return for: A) Treasury Bonds. B) a portfolio of securities with similar risk. C) a broad based market portfolio like the S&P 500 index. D) Treasury Bills.
Q:
JRN Enterprises just announced that it plans to cut its dividend from $2.50 to $1.50 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 4% per year and JRN's stock was trading at $25.00 per share. With the new expansion, JRN's dividends are expected to grow at 8% per year indefinitely. Assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to: A) $25.00 B) $15.00 C) $31.25 D) $27.50
Q:
Rearden Metals has a current stock price of $30 share, is expected to pay a dividend of $1.20 in one year, and its expected price right after paying that dividend is $33. Rearden's expected dividend yield is closest to: A) 3.40% B) 3.65% C) 4.00% D) 4.20%
Q:
Which of the following formulas is INCORRECT?A) g = retention rate x return on new investmentB) Divt = EPSt x Dividend Payout RateC) P0 = D) rE = - g
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Glucose Scan Incorporated (GSI) currently sells its latest glucose monitor, the Glucoscan 3000, to diabetic patients for $129. GSI plans on lowering their price next year to $99 per unit. The cost of goods sold for each Glucoscan unit is $50, and GSI expects to sell 100,000 units over the next year. Suppose that if GSI drops the price on the Glucoscan 3000 immediately, it can increase sales over the next year by 30% to 130,000 units. Also suppose that for each Glucoscan monitor sold, GSI expects additional sales of $100 per year on glucose testing strips and these strips have a gross profit margin of 75%. Considering the increase in the sale of testing strips, the incremental impact of this price drop on the firms EBIT is closest to: A) a decline of 1.5 million. B) a decline of 0.7 million. C) an increase of 0.7 million. D) an increase of 1.5 million.
Q:
Money that has been or will be paid regardless of the decision whether or not to proceed with the project is: A) cannibalization. B) considered as part of the initial investment in the project. C) an opportunity cost. D) a sunk cost.