Investments I: Fundamentals of Performance Evaluation

Suppose an asset provides annual risk-free cash flows at the end of each year in perpetuity. The risk-free rate is 5%. The first cash flow is $200, and the cash flows grow at 4% per year. What is the value of this perpetuity?

10. Question 10 Suppose an asset provides annual risk-free cash flows at the end of each year in perpetuity. The risk-free rate is 5%. The first cash flow is $200,…

Investments I: Fundamentals of Performance Evaluation

Suppose debt is 20% of a firm’s capital structure and equity is 80%. The required return on the firm’s debt is 5%, and the required return on the firm’s equity is 12%. Suppose there is zero corporate tax. What is the firm’s weighted average cost of capital (WACC)?

3. Question 3 Suppose debt is 20% of a firm’s capital structure and equity is 80%. The required return on the firm’s debt is 5%, and the required return on…

Investments I: Fundamentals of Performance Evaluation

Suppose a mutual fund yielded a return of 14% last year. Its CAPM beta (β) is 1.2. The risk-free rate was 5% last year and the stock market return was 10% last year. What is the alpha (α) of the mutual fund?

9. Question 9 Suppose a mutual fund yielded a return of 14% last year. Its CAPM beta (β) is 1.2. The risk-free rate was 5% last year and the stock…

Investments I: Fundamentals of Performance Evaluation

Suppose a mutual fund yielded a return of 14% last year. Its CAPM beta (β) is 1.2. The risk-free rate was 5% last year and the stock market return was 10% last year. What is the required return (i.e., benchmark return) for the mutual fund in the CAPM?

8. Question 8 Suppose a mutual fund yielded a return of 14% last year. Its CAPM beta (β) is 1.2. The risk-free rate was 5% last year and the stock…

Investments I: Fundamentals of Performance Evaluation | Online Course Support

Suppose an asset provides annual risk-free cash flows of $200 at the end of each year in perpetuity. The risk-free rate is 5%. What is the value of this perpetuity?

5. Question 5 Suppose an asset provides annual risk-free cash flows of $200 at the end of each year in perpetuity. The risk-free rate is 5%. What is the value…