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Investors expect the market rate of return this year to be 12%. A stock with a beta of 1.2 has an expected rate of return of 14%. If the market return this year turns out to be 8%, what is the rate of return on the stock?

You are considering acquiring a firm that you believe can generate expected cash flows of $23,000 a year forever. However, you recognize that those cash flows are uncertain

The risk-free rate is 4% and the expected rate of return on the market portfolio is 9%

A share of stock with a beta of .65 now sells for $40. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 6%, and the market risk premium is 9%. If the stock is perceived to be fairly priced today, what must be investors’ expectation of the price of the stock at the end of the year?

A share of stock with a beta of .78 now sells for $58. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 5%, and the market risk premium is 8%

We Do Bankruptcies is a law firm that specializes in providing advice to firms in financial distress. It prospers in recessions when other firms are struggling. Consequently, its beta is negative, −.2

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