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You own two risky assets, both of which plot on the SML. Asset A has an expected return of 12.37% and a beta of 1.40. Asset B has an expected return of 14.13% and a beta of 1.65. If your portfolio beta is the same as the market portfolio, what proportion of your funds is invested in Asset A?
Please show work & formula used
A project has an initial cost of $41,125, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 14%. What is the project's NPV? (Hint: Begin by constructing a time line.) Do not round your intermediate calculations. Roun..
The firm earned $7,000 in sales last year while selling 20,000 units. Net Income that same year was $850. At the end of that same year, the Balance Sheet reflected $11,000 in total assets, having $3,500 in debt and $7,500 in equity accounts. The firm..
The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). Suppose that today you buy a bond wi..
Before purchasing a used car, Cody Lind checked www.kbb.com to learn what he should offer for the used car he wanted to buy. Then he conducted a carfax.com search on the car he found to see if the car had ever been in an accident. What is his monthly..
Flower Valley Company bonds have a 12.50 percent coupon rate. Interest is paid semiannually. The bonds have a par value of $1,000 and will mature 5 years from now. Compute the value of Flower Valley Company bonds if investors’ required rate of return..
Global Financial Corporation (GFC) has 10 million shares outstanding, each currently worth $80 per share. The firm’s mangers are considering a plan to split the company’s stock 2-for-1, but they are concerned about the impact this split announcement ..
Your division is considering two investment projects, each of which requires an up-form expenditure of $25 million. You estimate that the cost of Capital is 10% and that the investments will produce the following after-tax cash flows (in millions of ..
Unfortunately, the Capital Investment Committee refused to approve your recommendation (Problem 1) since you did not consider the uncertainty inherent in these types of investments. Normal distribution (mean of $10,000, standard deviation of $3,000) ..
You are expecting to receive $300 at the end of each year in years 3, 4, and 5, and then 500 each year at the end of each year in years 10 through 25, inclusive. If the appropriate discount rate is 8.8 percent, for how much would you be able to sell ..
Computer stocks currently provide an expected rate of return of 14%. MBI, a large computer company, will pay a year-end dividend of $1 per share. If the stock is selling at $20 per share, what must be the market's expectation of the growth rate of MB..
Maverick Equipment Rental was burglarized on 2/15/15. It is unclear how many items were stolen. Maverick and its insurance company are currently working to estimate the dollar value of the stolen goods in order to reach a financial settlement under t..
5 years ago, Barton Industries issued 25-year no callable, semi annual bonds with a $1,900 face value and a 10% coupon, semi annual payment ($95 payment every 6 months). The bonds currently sell for $845.87. If the firm's marginal tax rate is 40%, wh..
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