We Do Bankruptcies is a law firm that specializes in providing advice to firms in financial distress. It prospers in recessions wh other firms are struggling. Consequently, its beta is negative, -0.4.

a. If the interest rate on Treasury bills is 6% and the expected return on the market portfolio is 16%, what is the expected retur on the shares of the law firm according to the CAPM?
b. Suppose you invested 60% of your wealth in the market portfolio and the remainder of your wealth in the shares in the law firm. What would be the beta of your portfolio?

Case in point 1.2 suppose you work in the it department of global hotels, a multinational hotel chain. global hotels runs several specialized business support systems, including a guest reservations system that was developed in-house to meet the requirements of a large company with worldwide operations. guests can make one-stop online reservations by visiting global's website, which has links to all major travel industry sites. global hotels just acquired momma's, a regional chain of 20 motels in western canada. momma's uses a vertical reservations package suitable for small- to medium-sized businesses and a generic accounting and finance package. should momma's use global hotels' information systems or continue with its own? in your answer, consider issues such as business profiles, business processes, system interactivity, edi, ecommerce, and the characteristics of both information systems. what additional information would be to you in making a recommendation?

Oakmont company has an opportunity to manufacture and sell a new product for a four-year period. the company’s discount rate is 18%. after careful study, oakmont estimated the following costs and revenues for the new product: cost of equipment needed $ 230,000 working capital needed $ 84,000 overhaul of the equipment in year two $ 9,000 salvage value of the equipment in four years $ 12,000 annual revenues and costs: sales revenues $ 400,000 variable expenses $ 195,000 fixed out-of-pocket operating costs $ 85,000 when the project concludes in four years the working capital will be released for investment elsewhere within the company. click here to view exhibit 12b-1 and exhibit 12b-2, to determine the appropriate discount factor(s) using tables.

Emily spent her summer vacation in buenos aires, argentina, where she got plastic surgery for a fraction of what it would cost in the united states. this is an example of: