Answer the questions based on

Answer the questions based on the following information:

(1) The expected return required by the market for a portfolio
with a beta of 1 is 14%.

(2) The T-bill’s expected rate of return is estimated to
be5%.

a.What is the expected rate of return on
the market portfolio? (Round your answer to 2 decimal
places.)

b.What would be the expected rate of
return on a stock with ß = 0? (Round your answer to 2
decimal places.)

c.Suppose you consider buying a share of
stock at $49. The stock is expected to pay $4 dividends next year
and you expect it to sell then for $51. The stock risk has been
evaluated at ß = –.5. Is the stock overpriced or underpriced?

multiple choice

Underpriced
Overpriced

Answer the questions based on the table below.

	Cash Dividend	Stock Repurchases	Stock Dividend
Value of Operations	$900,000,000	$900,000,000	$900,000,000
Value of Cash balance	80,000,000	80,000,000	80,000,000
Total value of firm	$980,000,000	$980,000,000	$980,000,000
– Debt	100,000,000	100,000,000	100,000,000
– Preferred stock	80,000,000	80,000,000	80,000,000
Value of equity	$800,000,000	$800,000,000	$800,000,000
# of shares Before the event	40,000,000	40,000,000	40,000,000
Stock price Before the event	$20	$20	$20
# of shares After the event	( )	( )	( )
Stock price After the event	( )	( )	( )

The firm considers cash dividend using the current cash balance of $80,000,000. Figure out the dividend per share.

Once the cash dividend is completed, figure out the stock price.

The firm considers stock repurchase using the current cash balance, $80,000,000. Figure out how many shares this firm can repurchase.

Once the stock repurchase is completed, figure out the stock price.

The firm considers a 25% stock dividend. How many new shares does this firm issue?

Once the stock dividend of 25% is completed, figure out the stock price.

ORDER THIS OR A SIMILAR PAPER AND GET 20% DICOUNT. USE CODE: GET2O

Answer the questions based on

ORDER THIS OR A SIMILAR PAPER AND GET 20% DICOUNT. USE CODE: GET2O