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A stock has a beta of 1.25 and an expected return of 12.3 percent. A risk-free asset currently earns 4.05 percent. Required: (a) What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Expected return % (b) If a portfolio of the two assets has a beta of 0.85, what are the portfolio weights? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) Weight of the stock Weight of the risk-free asset (c) If a portfolio of the two assets has an expected return of 11.5 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Beta (d) If a portfolio of the two assets has a beta of 2.45, what are the portfolio weights? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) Weight of the stock Weight of the risk-free asset
The most pessimistic estimate represents a value that the project's NPV is not expected to fall below more than 10 percent of the time. What is the probability that this project will have a negative NPV?
Assauer is not willing to consider Glovanskia for investment if the country risk rating is below 4.0. Should Assauer consider Glovanskia for investment?
River Cruises is allequityfinanced with 100,000 shares. It now proposes to issue $250,000 of debt at an interest rate of 10% and to use the proceeds to repurchase 25,000 shares. Suppose that the corporate tax rate is 35%. Calculate the dollar incre..
Marge Inovera is trying to value the stock of Hot Tub Time Machines, Limited (HTTM). To easily see how a change in one or more of her assumptions affects the estimated value of the stock, she is using a spreadsheet model. The model has projections fo..
Fully amortizing, however, negative amortization allowed if payment cap reached. Based on estimated forward rates, the index to which the ARM is tied is focused as follows: Compute the uncapped and capped payments, loan balances, and yield for an ARM..
Some advocates of behavioural finance agree with efficient market advocates that indexing is the optimal investment strategy for most investors. But their reasons for this conclusion differ greatly. Compare and contrast the rationale for indexing acc..
the florida retail company is a collection of small consumer electronic retail stores. the company is known for its
A good rule of thumb for getting time shifting to work out right is. The sum of the N and the exponenent should equal the last time period you see in the sequence.
A Treasury STRIPS is quoted at 61.159 and has 10 years until maturity. What is the yield to maturity?
Stock R has a beta of 1.4, Stock S has a beta of 0.75, the expected rate of return on an average stock is 13%, 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 exc..
When a firm's long-term debt-equity ratio is .98, the firm: If a firm's total debt ratio is greater than .5, then: Which of the following actions could improve a firm's current ratio if it is now less than 1.0? What is the residual income for a firm ..
Explain government financial reporting requirements Analyze financial statements and budgets to make appropriate administrative decisions and apply the budgets as a disciplinary process.
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