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Suppose you purchased $1,000 of Stock A with your own money. You then borrowed $500 and used this money to buy Stock B. This means that the portfolio weights are as follows: wA = 1000/1000 = 1.00; wB = 500/1000 = 0.50; wC = -500/1000 = - 0.50. The correlation coefficient between A and B is 0.70; interest rate on the risk-free asset (Security C) is 5%; variance of Stock A is 0.25; variance of Stock B is 0.49; expected return on Stock A is 10% and Stock B is 16%. Calculate the expected return of the portfolio comprising securities A, B, C.
a. 13.5% b. 14.5% c. 15.5% d. None of the above
Calculate the variance of a portfolio of the three securities.
a. 0.6175 b. 0.7858 c. 0.5168 d. None of the above
Filer Manufacturing has 9.2 million shares of common stock outstanding. The current share price is $62, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. Suppose the company’s stock has a beta of 1.2. The r..
Calculating Annuity Present Value- An investment offers $5,500 per year for 15 years, with the first payment occurring one year from now. If the required return is 6 percent, what is the value of the investment? What would the value be if the payment..
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An investor has put money in four stocks in the dollar amounts indicated and with betas specified. What is the portfolio beta? Stock A $3,780 with a beta of 1.03; stock B $7,411 with a beta of 1; stock C $5,584 with a beta of 1.03; and stock D $5,895..
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A stock has had the following year-end prices and dividends: Year Price Dividend 1 $ 43.23 - 2 48.21 $ .39 3 57.13 .42 4 45.21 .55 5 52.13 .60 6 61.21 .68 What are the arithmetic and geometric returns for the stock?
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A responsibility center in which the relationship between resources and products or services produced is not well defined is known as a(n)
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You borrowed $80000 to finance the purchase of a property through a standard, 30 year fixed rate mortgage with an annual interest rate of 8 percent, compounded monthly. what is your monthly mortgage payment? how much interest and how much principal r..
a regional bank has decided to open an office overseas for serving those businesses that are expanding internationally.
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