FIN 402 Week 2 Weekly Question
c . Security Analyst C uses the constant dividend valuation model approach presented in Chapter 7 as Formula 7 – 5 on page 147 . She uses Security Analyst B ’ s assumption about dividends ( per share ) and assigns a growth rate , g , of 9 percent and a required rate of return ( Ke ) of 12 percent . Is her value higher or lower than that of the other security analysts ?
12 . Using the formula for the security market line ( Formula 21 – 7 on page 534 ), if the risk-free rate ( RF ) is 7 percent , the beta ( bi ) is 1.25 , and the market rate of return ( KM ) is 11.8 percent , compute the anticipated rate of return ( Ki ).
13 . If another security had a lower beta than indicated in problem 10 , would Kibe lower or higher ? What is the logic behind your answer in terms of risk ?
14 . The capital market line ( CML ) as defined by the capital asset pricing model is characterized by all of the following except
15 . The beta coefficient is a measure of
16 . Systematic risk is rewarded with a premium in the marketplace because
17 . Which of the following are assumptions of the capital asset pricing model ?
18 . The correlation coefficient : 19 . The standard deviation of a risk-free asset is :
20 . A good way to minimize risk and receive an optimum return on your portfolio is :
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FIN 402 Week 2 Weekly Question