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rate of return

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Question

Investors expect the market rate of return this year to be 12%. A stock with a beta of .5 has an expected rate of

return of 10%. If the market return this year turns out to be 9%, what is the rate of return on the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)

 
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shares

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Question

You purchase 100 shares of stock for $50 a share. The stock pays a $3 per share dividend at year-end.

a.What is the rate of return on your investment if the end-of-year stock price is (i) $47; (ii) $50; (iii) $53? (Leave no cells blank – be certain to enter “0” wherever required. Enter your answers as a whole percent.)
Stock price      Rate of return
$47 %  
$50 %  
$53 %  
b.What is your real (inflation-adjusted) rate of return if the inflation rate is 5%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amounts should be indicated by a minus sign.)
Stock price     Real rate of return
$47 %  
$50 %  
$53
 
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share

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Question

 Young Corporation stock currently sells for $35 per share. There are 1 million shares currently outstanding. The company announces plans to raise $4 million by offering shares to the public at a price of $35 per share.
 a.If the underwriting spread is 6%, how many shares will the company need to issue in order to be left with net proceeds of $4 million? (Do not round intermediate calculations. Round your answer to the nearest whole number.)
   Number of shares  
 b.If other administrative costs are $60,000, what is the dollar value of the total direct costs of the issue?(Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
   Total direct costs$   
 c.If the share price falls by 8% at the announcement of the plans to proceed with a seasoned offering, what is the dollar cost of the announcement effect? (Enter your answer in dollars not in millions.)
   Cost of the announcement effect$

 
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fixed income

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Question

The treasurer of Riley Coal Co. is asked to compute the cost of fixed income securities for her corporation. Even

before making the calculations, she assumes the aftertax cost of debt is at least 1 percent less than that for preferred stock.

     Debt can be issued at a yield of 12.6 percent, and the corporate tax rate is 20 percent. Preferred stock will be priced at $78 and pay a dividend of $8.00. The flotation cost on the preferred stock is $7.

a.Compute the aftertax cost of debt. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
  Aftertax cost of debt %  
b.Compute the aftertax cost of preferred stock. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
  Aftertax cost of preferred stock %  
c.Based on the facts given above, is the treasurer correct?
  
 No, the treasurer is incorrect.Yes, the treasurer is correct.
 
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