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Consider two stocks, Stock D, with an expected return of 16 percent and a standard deviation of 31 percent, and Stock I, an international company, with an expected return of 9 percent and a standard deviation of 19 percent. The correlation between the two stocks is –.17. What are the expected return and standard deviation of the minimum variance portfolio? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Expected return % Standard deviation %
BOND VALUATION Callaghan Motors' bonds have 13 years remaining to maturity. Interest is paid semi annually, they have a $1,000 par value, the coupon interest rate is 5%, and the yield to maturity is 6%. What is the bond's current market price?
In 1986 Standard Oil issued some bonds. At T, investors received $1000 and an additional amount based on the oil price at that time. The additional amount was 170 times the excess of the oil price over $25. The maximum additional amount paid was $255..
ACB Inc. is examining its capital structure with the intent of arriving at an optimal debt ratio. It currently has no debt and has a beta of 1.3. The T-bill rate is 8% and the T-Bond rate is 9.5%. Your research indicates that the debt rating will as ..
Assume that your father is now 50 years old, that he plans to retire in 10 years, and that he expects to live for 25 years after he retires, that is, until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he..
Consider two streams of cash flows, A and B. Stream A’s first cash flow is 7,000 and is received three years from today. Future cash flows in stream A grow by 3 percent in perpetuity. What is the present value of each stream? Suppose that the two are..
Here are the data on $1000 par value bonds issued by Microsoft, GE Capital, and Morgan Stanley at the end of 2012. Assume you are thinking about buying these bonds as of January 2013. How would the value of the bonds change if (1) your required rate ..
The assets of "Sample Company" consist entirely of current assets and net plant and equipment. The firm has total assets of $ 4,277,456 and net plant and equipment of $ 1,668,538. The company has notes payable of $ 108,290, long-term debt of $ 832,65..
How do you solve for the long-term constant growth in FCF? The values I'm given in the problem are the current marketable securities, notes payable, long-term bonds, preferred stock, WACC, number of shares of stock as well as the projected free cash ..
Market Enterprises would like to issue bonds and needs to determine the approximate rate they would need to pay investors. A firm with similar risk recently issued bonds with the following current features a 5% coupon rate, 10 years until maturity, a..
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next seven years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a $12.35 per share dividend in year 10..
As a mature responsible financial manager, please, consider the following: You are the manager of a commercial bank. You have been presented with an opportunity to invest in risky projects involving commercial real estate in a major urban center. Wha..
Ribbon Industries reported sales of $3 million and net income of $400,000 for 2010. The retained earnings balance at the end of 2012 is $7 million. Ribbon Industries has a dividend payout ratio of 30%. If sales are expected to increase by 25% next ye..
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