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You have just taken over as a fund manager at a brokerage firm. Your assistant, Thomas, is briefing you on the current portfolio and states "We have too much of our portfolio in Alpha. We should probably move some of those funds into Gamma so we can achieve better diversification." Is he right? Here is the data on all three stocks. Assume, for convenience, that all three securities do not pay dividends. Alpha, Current Price $30.00; Current Weight 78%; Next Year's Price: Expansion $37.00, Normal $32.00, Recession $24.00; Beta, Current Price 27.50; Current Weight 22%; Next Year's Price: Expansion 27.50, Normal 26, Recession 25; Gamma, Current Price $15.00; Current Weight 0%; Next Year's Price: Expansion $18.50, Normal $16.00, Recession $12.00.
a) Even if the probabilities for different states of economy (expansion, normal and recession) are available one still doesn't have sufficient information to make a definitive statement.
b) Only if the probabilities for different states of economy (expansion, normal and recession) become available would one be able to make a definitive statement.
c) Yes.
d) No.
Develop a BSC that is aligned to the key goal in the strategic plan, i.e. exceeding revenue of $25 million dollars by 2015.
Jules Bergman is aware that there are some qualitative factors that are relevant to the surgery center decision. What qualitative factors might support project acceptance? What qualitative factors might preclude project acceptance?
Exchange rates may satisfy PPP as competitive positions of countries' will remain unaffected subsequent to exchange rate changes.
John Friedman is in the 40 percent personal tax bracket. He is considering investing in HCA bonds that carry a 12 percent interest rate. What is his after-tax yield (interest rate) on the bonds?
A company's 8% coupon rate, semi-annual payment, $1,000 par value bond that matures in 25 years sells at a price of $619.33. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calcula..
Banks Corporation purchased 400 shares of Herman Inc. common stock as an available-for-sale investment for $13,200. During the year, Herman paid a cash dividend of $3.25 per share. At year-end, Herman stock was selling for $34.50 per share.
Stock R has a beta of 2.1, Stock S has a beta of 0.60, the expected rate of return on an average stock is 9%, and the risk-free rate is 5%. By how much does the required return on the riskier stock exceed the required return on the riskier stock exce..
Suppose an investor would like to buy 200 Treasury notes. The investor wants notes with an annual coupon rate of 7%, a 3-year maturity, and semi-annual coupon payments. Assume each Treasury note has a par value of $1,000. Assuming the yield curve is ..
It will cost $3,600 to acquire a small ice cream cart. Cart sales are expected to be $2,800 a year for four years. After the four years, the cart is expected to be worthless as that is the expected remaining life of the cooling system. What is the pa..
Calculate the firms EOQ for the item of inventory and what is the firms total cost based upon the EOQ calculated above - Calculate the current earnings per share
A firm is expected to pay $2 dividend per share in year 1 (D1=$2) and the dividend is expected to grow at a constant rate of 5%. If the firm's stock price is $28.64 based on the constant growth model, what is the required rate of return on the stock?
What is the future value of $1,400, placed in a saving account for four years if the account pays 0.10, compounded quarterly?
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