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1. Is your portfolio balanced? Justify your answer.
2. What changes would you make, if any?
A high portfolio beta points that securities in the portflolio tend to be volatile in price movements than market as a whole.
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The stock with the lowest beta (0.76) is Apple Inc. stock. The stock with the highest beta (3.29) is Facebook Inc. stock. Beta for Apple Inc. stock is less that 1, it tells us that stock price is less volatile and risky than market.
While beta for Facebook Inc. stock is more than 1, it indicate that stock price is more volatile and risky than overall market. Looking at the performance of these stock with my initial investment of $10,000 for each stock, I can tell that Facebook Inc. stock have higher earning than Apple Inc. stock. So, with more risky securities, such as Facebook Inc. in my case, investor can expect a higher return than for the Apple securities which are less risky.
Determine the Rate of Return for the project and The projected life time of this design is 8 years and there is no salvage value.
How have money market rates changes since the beginning of the year and consider the existing economic conditions. Do you think money market rates will increase or decrease during the remainder of the year?
Cost of debt For each of the following bonds, calculate the after-tax cost of debt. Assume the coupons are paid semi-annually, that the tax rate is 40 percent, and that we are dealing with $1,000 of par value.
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You are a managing partner of a prestigious investment counseling firm that specializes in individual rather than institutional accounts. The firm has developed a national reputation for its ability to blend modern portfolio theory and traditional..
You are required to suggest the firm on the investment proposal. What would be impact if a tax rate of 40% is considered for the project?
Suppose that the assets of a bank consist of $500 million of loans to BBB-rated corporations. The PD for the corporations is estimated as 0.3%.
Determine the firms EPS indifference EBIT and explain what the EPS indifference EBIT* is and how it can be used to assist the firm make its capital structure choice.
If you are the CEO of a British company that now faces the loss of a lucrative contract in Malaysia because of the dispute. What action should you take and How do you think British government should respond to the Malaysian action?
The stock of Trudeau Corporation went from $27 to $45 last year. The firm also paid $2 in dividends during the year. Compute the rate of return and what is the approximate yield to maturity of an 8% coupon bond with a par value of $1,000? The bond..
How do you determine which portfolio had the superior return and what other information do you need to decide?
You are required to describe, with examples, the range of alternative investments which are generally available on capital and other markets and to consider how they are used in constructing and hedging investment portfolios.
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