Question 5 Carter\'s preferred stock pays a dividend of $1.00 per quarter. If th

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Question 5 Carter's preferred stock pays a dividend of $1.00 per quarter. If the price of the stock is $72.50, what is its nominal (not effective) annual rate of return? Answer 4.74% 5.19% 4.14% 6.68% 5.52% 2 points Question 6 Linke Motors has a beta of 1.30, the T-bill rate is 3.00%, and the T-bond rate is 6.5%. The annual return on the stock market during the past 3 years was 15.00%, but investors expect the annual future stock market return to be 13.75%. Based on the SML, what is the firm's required return? Answer 15.93% 13.38% 13.06% 13.22% 16.40% Question 9 Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM = 5.25%; and b = 1.15. Based on the CAPM approach, what is the cost of equity from retained earnings? Answer 7.60% 8.62% 12.67% 12.27% 10.14% Question 18 Company A has a beta of 0.70, while Company B's beta is 1.30. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.) Answer 3.73% 4.74% 4.05% 4.90% 3.60% Question 27 Suppose Boyson Corporation

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5 Carter's preferred stock pays a dividend of $1.00 per quarter. If the price of the stock is $72.50, what is its nominal (not effective) annual rate of return? Answer answer 5.52% ==================================================================================================================================== Dividend per $ Quarter 1.00 ========================================================================================================================================== Price of Stock Nominal Annual rate of return = ($1.00* 4)/ $72.50 ======================================================================================================================================= Nominal annual $ 72.50 = 5.52% =================================================================================================================================== rate of return of the stock is 5.52% ===============================================================================================================================6 Linke Motors has a beta of 1.30, the T-bill rate is 3.00%, and the T-bond rate is 6.5%. The annual return on the stock market during the past 3 years was 15.00%, but investors expect the annual future stock market return to be 13.75%. Based on the SML, what is the firm's required return? Answer 13.38% ========================================================================================================================================================================================= =3.00%+1.30(13.75%%,-3.00%)=13.75% ============================================================================================================================================================================================================Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM = 5.25%; and b = 1.30. Based on the CAPM approach, what is the cost of equity from retained earnings? ============================================================================================================================================================================================================ e. 10.93% ANSWER ========================================================================================================================================= Mike Flannery holds the following portfolio: Stock Investment Beta A $150,000 1.40 B $75,000 0.80 C $75,000 1.00 D $75,000 1.20 Total $375,000 What is the portfolio's beta? ==========================================================================Answer1.16 ==================================================================================================================================

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