Question 22 pts A stock provides an (expected) return of 16%. The risk free rate
ID: 2760551 • Letter: Q
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Question 22 pts
A stock provides an (expected) return of 16%. The risk free rate (e.g., T-Bill rate) is 3%. What is the risk premium for the stock?
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Question 31 pts
Why do stock market investors appear not to be concerned with unique (firm specific) risks when calculating expected rates of return?
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Question 41 pts
The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio for which of the following reasons?
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Question 52 pts
Based on the corporate tax table below, what is the average tax rate for a firm with $120,000 taxable income?
Taxable Income Marginal Tax Rates
$0 - 50,000 15%
50,001 - 75,000 25%
75,001 - 100,000 34%
100,001 - 335,000 39%
335,001 - 10,000,000 34%
10,000,001 - 15,000,000 35%
15,000,001 - 18,333,333 38%
18,333,334 + 35%
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Question 61 pts
When is it appropriate to include sunk costs in the evaluation of a project?
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Question 71 pts
A firm has a piece of land that was unused, but plans to build a new office complex on it in a new capital project. The market value of the land should be considered as a component of project cash flows provided that the land:
3%Explanation / Answer
As per Chegg guidelines we answer one question per post but I have answered more than 1 Question Q22 Statement showing computations Particulars Amount Return on Stock 16% Risk Free Rate 3% risk premium for the stock = 16% - 3% 13% Q31 Unique risks can be eliminated through diversification. Q41 Individual stocks have no diversification of risk. Q61 It is never appropriate to include sunk costs.
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