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1.Mercury, Inc. has a Beta of 2.0 while 30-day Treasury bills

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Question;#1.Mercury, Inc. has a Beta of 2.0 while 30-day Treasury bills are yielding a return of 4.5%. The expected return on "The Market" is 15%.Calculate the required return for Mercury, Inc.Enter your answer as a percent. That is, ten percent would be entered as "10" or as "10.000" but not as "10%" and not as "0.10".#2.Why is it not usually appropriate to rank investments according to expected return only?a. All of these are valid reasons why you should not rank based solely upon Expected Return.b. "Expected return" is simply a "made up" statistic.c. It is just the "Expected return," which is not necessarily the return you will actually get next year.d. There are too many other things to consider, like the nature of the company's business, and the liklihood of bankruptcy.e. I should not rank them according to "Expected return," because I have no idea how to calculated "Expected" returns.f. "Expected Return" alone does not consider the risk of the investment.

 

Paper#50075 | Written in 18-Jul-2015

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