question 4 please 3. Consider a project with the following cash-flows:Timet=0t=1t=2t=3Cash-flow-1023What is the project's internal rate of return?A. 0.00%В. 7.58%C. 12.21%D. 14.21%E. None of the above4. A share is currently trading at £555.56 and is expected to pay out a dividend of£100 in exactly a year's time. Its dividends are expected to grow at a constant ratethereafter. What is the value of the annual growth rate if you know that the marketcapitalization rate is 15% per annum?A. -3% per annumB. 0% per annumC. 3% per annumD. 4% per annumE. 5% per annum5. What is the beta of a portfolio that has invested 10% in the riskless asset and theremainder in the following shares (assuming the answer is rounded to the nearest2nd decimal)?Share % Invested BetaX40%2Y30%1.520%1.2A. 1.59В. 1.49С. 1.18D. 0.75E. None of the above

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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

question 4 please

3. Consider a project with the following cash-flows:
Time
t=0
t=1
t=2
t=3
Cash-flow
-10
2
3
What is the project's internal rate of return?
A. 0.00%
В. 7.58%
C. 12.21%
D. 14.21%
E. None of the above
4. A share is currently trading at £555.56 and is expected to pay out a dividend of
£100 in exactly a year's time. Its dividends are expected to grow at a constant rate
thereafter. What is the value of the annual growth rate if you know that the market
capitalization rate is 15% per annum?
A. -3% per annum
B. 0% per annum
C. 3% per annum
D. 4% per annum
E. 5% per annum
5. What is the beta of a portfolio that has invested 10% in the riskless asset and the
remainder in the following shares (assuming the answer is rounded to the nearest
2nd decimal)?
Share % Invested Beta
X
40%
2
Y
30%
1.5
20%
1.2
A. 1.59
В. 1.49
С. 1.18
D. 0.75
E. None of the above

Expert Solution

Step 1

Formula to calculate the growth rate is:

P = D1

k - g

Where P is the price of the stock

k is the rate of return & g is the growth rate

Step by step

Solved in 2 steps

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