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Investment advisor A averages a 18% return. Investment advisor B averages a 15% return.

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1. Investment advisor A averages a 18% return. Investment advisor B averages a 15% return. Advisor A has a beta of 1.5, while B has a beta of 1.;If the risk-free rate is 6% and the market returned 14%, which advisor is the more-skilled investor?;If the risk-free rate is 3% and the market returned 15%, which advisor is the more-skilled investor?;2. Suppose you are trying to value the private pharmaceutical company PharmA. The 10M common shares of PharmA are all held by qualified investors. You are projecting earnings of $50M for the next fiscal year. While PharmA is private and smaller than many of its public competitors you believe it to have growth opportunities similar to the industry average. The current P/E ratio for the pharmaceutical industry is 17.2.;How would you estimate the share price for PharmA?;3. Suppose ABC has constant growth in earnings and that;Additional Requirements;Level of Detail: Show all work

 

Paper#20981 | Written in 18-Jul-2015

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