You Believe That Beta Alpha Watch Company Will Be Worth

question 24

Essay

You believe that Beta Alpha Watch Company will be worth $100 per share one year from now.How much are you willing to pay for one share today if the riskless rate is 8%,the expected return on the market is 18%,and the company's beta is 2?

---

Definitions:

Stepping-Stone Method

An iterative technique for moving from an initial feasible solution to an optimal solution in the transportation method.

Fixed Costs

Expenses that do not change with the level of production or sales over a certain period, such as rent, salaries, and insurance.

Transportation Model

A type of optimization model used in logistics that determines the most efficient way to distribute goods from several suppliers to multiple destinations.

Degeneracy

A situation in linear programming where more than one solution can lead to the optimal value, or when small changes to the coefficients greatly affect the solution's outcome.