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A portfolio consists of 4 securities
Security 1: Beta= 1.2 Standard deviation of random error term=5% Proportion=.10
Security 2: Beta=1.03 Standard deviation of random error term= 7% Proportion = .10
Security 3: Beta= 1.05 Standard deviation of random error term=8% Proportion=.50
Security 4: Beta= .90 Standard deviation of random error term= 2% Proportion= .30
The standard deviation of the market index is 15%. What is the total risk of this portfolio?
A pension plan is obligated to make disbursements of $1 million, $2 million, $5 million and $1 million at the end of each of the next four years, respectively. Find the duration of the plan’s obligations if interest rates are flat at 10% annually.
Which of the following would lower the sum of the present values of expected cash flows?
Edwards Electronics recently reported $10,125 of sales, $4,950 of operating costs other than depreciation, and $1,125 of depreciation. The company had no amortization charges, it had $3,150 of bonds that carry a 5.25% interest rate, and its federal-p..
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Kathy wants to buy bonds on the market with 10.5 years to remaining maturity, a current yield to maturity of 10%, and current price of 102 (total par - $1,000,000). The bonds make semi annual payments. What must the annual coupon rate be on the bonds..
what are bond ratings and how do they impact bond valuation?who are the bond ratings agencies and what do the ratings
You are considering two ways of financing a spring break vacation. You could put it on a credit card, at 12% APR, compounded monthly, or borrow from your parents, who want an interest payment of 10% every six months. The effective annual rate on the ..
Expected to pay $2.10 per share dividend at the end of this year. The dividend is expected to grow at a constant rate of 9% a year. The required rate of return on the stock, rS, is 6%. What is the value per share of stock?
Assuming Microsoft dividend grows by 3% every year for 10 years and the discount rate is 6%. What is the intrinsic price of Microsoft today and is it more or less than the market price?
Consider the following: A firm’s operations are 45% GREATER than an average firm in the market. Relevant government securities trade 3.7%; and the current average return on the market as a whole is 9.1%. What rate of return must the firm pay to attra..
A project under consideration has an internal rate of return of 14% and a beta of 0.7. The risk-free rate is 4%, and the expected rate of return on the market portfolio is 14%. Calculate the required return. Calculate the required return if its beta ..
An oil company is drilling a series of new wells that are adjacent to an existing oil field. About 20% of the new wells will be dry holes and will produce zero oil. If the wells do, in fact, strike oil, they have different expected values. What is th..
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