Finance Any Asset Pricing Theory forms the basic foundation of finance theory, in that it deals with the value of any asset under unknown or uncertain circumstances. The relationship between an asset and its price is the mainstay of the asset pricing theory: the lower the price, the poorer the expected performance. The Arbitrage Pricing Theory derives from this theory. The basic idea in the APT theory is that any sort

Finance the beta of Spock's portfolio is (.5)(.7)+(.5)(1.1) = 0.9 The beta of Kirk's portfolio is (.9)(1) + (.1)(0) = 0.9 The risk of these two portfolios is the same. Both have the same beta, which implies that they are equally risky, even though their composition is quite different. Essentially, all securities should be priced at their fair market value, under the efficient market hypothesis. Investors should be completely ration. However, there are two

" 3) a. If $1.25 represents a 40% dividend payout ratio, earnings per share are $3.13. A six percent return (the required return) would put future earnings at $3.32. ((3.32-3.13)*100)/3.13 = 6.07% b. 40% (the dividend payout ratio) of $3.32 (future estimated earnings) is $1.33 c. The price of the stock cannot be calculated accurately with the information given, however if its is assumed that the earnings per share (currently $3.13 with dividends

Finance Time Value of Money; Assessing the Value of a Starbucks Bond The concept of the future value of money and the present value of money are useful when assessing potential investments. The future value of an investment is the value that the investor will expect to receive at some point in the future. If an investor is considering purchasing a Starbucks bond which will pay one $2,000 in a year's time,

Finance Starbucks is engaged in the quick service food industry, primarily focused on coffee and related snacks. The company has come under strong competitive and economic pressures recently, and this has impacted its performance. However, Starbucks has turned around its financial performance in the past year, which has restored investor confidence in the company. Starbucks is both liquid and solvent. In the past year or so, they have improved their liquidity and

Finance Financial Analysis of Morrison's PLC Morrison's, the UK supermarket may be assessed as a potential investment. The firm may be considered by looking at the way that the share price is performing, comparing it to its past performance as well as benchmarking the performance against the industry The share price will reflect the market expectations, so as well as looking a past performance it is also necessary to look to the potential