00:01
So we'll answer each of the questions.
00:02
Part a, the beta of a stock can be calculated using formula which is cost, pay, variance, which is stock return, market return, divided by variance, market return.
00:26
So, cost, pay, variance is calculated by four relations multiplied with stock return and multiplied with stock market return.
00:39
So, we get stock return, which was 38 .6%, and market return, 34 .9%, four relations, 0 .3, conversion, four variances, 0 .3 multiplied 0 .3, 0 .86 multiplied 0 .249, so four variances, 0 .0228.
01:17
Now we calculate the beta, so beta is 0 .228 divided by 0 .249 to the whole square, which is 0 .3671, or 36 .71%.
01:52
This is the beta.
01:55
A, b part, capital asset price model, b, b, m, expected return, b, risk -free, plus beta multiplied market risk premium.
02:20
Value risk -free rate, 0 .9, plus 1 .9 beta multiplied market premium, 5 .2.
02:32
So, we get 10 .17%.
02:42
For c, annual alpha, a, b, average fund return, which is six years, minus risk -free rate, which is 1 .1, plus beta, 0 .79, multiplied average market return, 7 .6.
03:12
We get minus 1 .672.
03:18
So, minus 1 .672 % is the final answer.
03:26
For d, the weight average cost of capital that we calculate this, we need cost of equity, divided by weight, the equity weight, plus cost of debt, 1 minus tax rate, multiplied with debt weight...