Returns%

Period Probability Intel GE

Boom 0.4 20 10

Normal 0.3 15 10

Recession 0.3 12 8

1) Which one is more risky Intel or GE?

2) Compute the covariance of the two return series.

3) Compute the correlation coefficient of the two return series.

4) Compute the risk of the portfolio.

Tends to reduce industry profitability : Which of the following tends to reduce industry profitability? |

Required rate of return to evaluate projects of this nature : Mars, Inc. is considering the purchase of a new machine which will reduce manufacturing costs by $5,000 annually. The company will depreciate the cost of the new machine using the straight line method over the project life and it expects to sell the .. |

Straight line method over the project life : Mars, Inc. is considering the purchase of a new machine which will reduce manufacturing costs by $5,000 annually. The company will depreciate the cost of the new machine using the straight line method over the project life and it expects to sell the .. |

Demand and supply shocks : Demand and Supply Shocks Which of the following can be inflationary? |

Compute the covariance of the two return series : Which one is more risky Intel or GE? Compute the covariance of the two return series. Compute the correlation coefficient of the two return series. |

Best estimate of the companys cost of equity : Suppose a firm just issued a dividend of $2.50 per share on its common stock. The firm's dividends have been growing a 5% rate. IF the stock currently sells for $65, what is your best estimate of the company's cost of equity? |

What is the expected rate of return on the portfolio : You own a portfolio that has $2500 invested in Stock A and $3500 in Stock B. If the expected returns on these stocks are 10% and 16%, respectively, what is the expected rate of return on the portfolio? |

Calculate the weighted average cost for a firm : Given the following info, calculate the weighted average cost for a firm: |

Reduce industry profitability : Which of the following tends to reduce industry profitability? |

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