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Q. 1) Two stocks are available. The corresponding expected rates of return are r1 also r2; the corresponding variances also covariance's are σ12, σ22 also σ12. Illustrate what percentages of total investment should be invested in each of the two stocks to minimize the total variance of the rate of return of the resulting portfolio? Illustrate what is the mean rate of return of this portfolio?
2)1. Dell Computers has an outstanding matter of bond with a par value of $1,000, paying 8 percent coupon rate. The bond has 10 yrs to maturity.
(A) Illustrate what is the value of the bond assuming 7percent (%) required rate of return?
(B) If Dell Computers bond paid interest semiannually, Elucidate how much should the bond sell?
(C) Assume the bond is currently selling for $898.55, Illustrate what is the bond's YTM? (Yield to maturity)
2. Target Company paid $1.00 per share in common stock dividends last yr. The dividends of the company are expected to grow at a 5percent (%) rate in the next three yrs. After three yrs, the dividend is expected to grow at a constant growth of 7percent (%) indefinitely. Illustrate what is the value of Target's common stock? Stockholders require a return of 10percent (%) to invest in Target's common stock.
Explain decision making on the basis of the net present value criterion and what is the meaning of the computed net present value figure
Computation of target selling price and target cost of manufacture and Should they make the Re-Rind and what would you say to them to reconcile the positions.
Objective type questions on payback period, NPV and IRR and What is the internal rate of return that Turnbull can earn on this project
She creates a gift of depreciated property (adjusted basis exceeds fair market value) to Marsha, appreciated property (fair market value exceeds adjusted basis) to Jan.
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Q. Compute the present value of a two-period annuity of $1 per period if the discount rate is 10 percent, A two-period annuity of $1 per period has a present value of $1.808. Find the discount rate from the present value table.
Objective type questions on leverages and The major short coming of the EBIT-EPS approach to capital structure is that
Computation of expected returns and variances and covariance of stocks and Choose your own risk aversion coefficient
Calculate the 6 monthly discount factors D(t) and the semi-annual zero coupon rates z(t), where t = 0.5, 1, 1.5, ., 9.5, 10. (2) Using the discount factors derived in (1), calculate the price of a 4½ year semi-annual coupon bond with an annual coupon..
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