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FINC-3470-E1-Corporate Finance
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Pickup Industries has a profit margin of 15% and a dividend payout of 40%. Last year’s sales were $600 million and total assets were $400 million. Assets and costs are proportional to sales, but debt and equity are not. For simplicity, assume the company has no interest charge obligations. If next year’s sales growth is projected to be 20%, how much external financing (EFN) is needed?
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A stock has a beta of 1.20 and an expected return of 12%. The market is expected to yield 11%. According to CAPM, what is the risk-free rate?
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Which of the following is the best definition of portfolio weights?
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Suppose it is appropriate to use a normal distribution to describe return and risk of a risky asset. The higher the standard deviation of the risky asset, the _____________:
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If the economy booms, R&F, Inc. stock is expected to return 16%. If the economy goes into a recessionary period, then R&F is expected to only return 3%. The probability of a boom is 80% while the probability of a recession is 20%. What is the variance of the returns on R&F stock?
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The concept of stock correlation shows:
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Over the last three years you earned 5%, 7%, and 9%. What is the standard deviation of your returns?
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All else the same, actions or events that cause firm returns to be less correlated with changes in the overall economy will _______ the firm's systematic risk.
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Blue Ribbon, Inc. wants to have a weighted average cost of capital of 10%. The firm has an after-tax cost of debt of 4% and a cost of equity of 12%. What debt-equity ratio is needed for the firm to achieve their targeted weighted average cost of capital?
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What is the beta of a portfolio comprised of the following securities?_Stock Amount Invested Beta____A 55% 1.03 __B 20% 1.73__C 25% 0.87_
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