Penney Fashions is adding a new line of shoes to the company portfolio and has the following information: the expected market return is 13%, the risk-free rate is 3%, and the expected return on the new project is 11%. What is the beta of the project?

Question

01-01-2021
Business

Answered

Find the information you're looking for at Westonci.ca, the trusted Q&A platform with a community of knowledgeable experts. Connect with a community of experts ready to help you find solutions to your questions quickly and accurately. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform.

Penney Fashions is adding a new line of shoes to the company portfolio and has the following information: the expected market return is 13%, the risk-free rate is 3%, and the expected return on the new project is 11%. What is the beta of the project?

Sagot :

We hope our answers were helpful. Return anytime for more information and answers to any other questions you may have. We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. Stay curious and keep coming back to Westonci.ca for answers to all your burning questions.

Which statement correctly describes Italy's climate? A. tropical summers and arctic winters B. cold, dry winters and hot, rainy summers C. hot, dry summers and

Mark each statement if it describes an element of Islamic culture. A. Caliphs were Muslim rulers who succeeded Muhammad. B. Caliphs were prophets of equal statu

Select all that apply. Which are elements of civilization? cities canals and waterways specialized labor brick houses communication and writing moral code

Which was a major cause of the French and Indian war A. Waves of French settlers pouring into Mississippi Valley B. Disagreements between England and its coloni

Each of the following is a disadvantage of using credit cards EXCEPT: A. often involves going into debt B. places a claim on future income C. does not seem like

What do the colonies of New York, New Jersey, Delaware, and Pennsylvania have in common? The colonies have the same founder. The colonies were created from the

HELPP ME PLEASE!! What is the main function of the circulatory system? A. to deliver oxygen and nutrients to cells throughout the body B. to provide all major o

Select all that apply. Which are elements of civilization? cities canals and waterways specialized labor brick houses communication and writing moral code

Florida's constitution most closely resembles which of the following? a. The constitution of the conferderate states of America b. The constitution of the unite

Mark each statement if it describes an element of Islamic culture. A. Caliphs were Muslim rulers who succeeded Muhammad. B. Caliphs were prophets of equal statu

abdulmajeedabiodunac abdulmajeedabiodunac · Answer 1 · 2021-01-02T19:46:07-05:00

Answer:

0.80

Explanation:

Based on the Capital Asset Pricing Model(CAPM), the formula for determining the expected return on the project stated below can be used to determine the beta of the project, whereby the formula is rearranged such that the project beta is made the subject of the formula:

expected return=risk-free rate+beta*(market return-risk-free rate)

expected return on the project=11%

risk-free rate=3%

beta=the unknown

market return=13%

11%=3%+beta*(13%-3%)

11%=3%+beta*10%

11%-3%=beta*10%

8%=beta*10%

beta=8%/10%=0.80

Sagot :

Other Questions