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Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds.
If the standard deviation of your portfolio was 42% and the standard deviation of the market was 18%, what would be your estimate of the beta of the portfolio?
Hint: Note that a well-diversified portfolio will have a firm-specific variance and a residual standard deviation = 0%.
Enter your answer rounded to two decimal places. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
Create synthetic positions using any options of your chice. Discuss why an options trader would create these synthetic positions using options, and include the advantages and disadvantages of the trades. Also include a discussion on whether this synt..
From a tax perspective, what do you view as some of the advantages and disadvantages of filing as a partnership? Please be specific and thorough in your response. List several examples of each.
Chad lives in Tulsa, Oklahoma and makes $50,000 per year at his current job selling luxury real estate. Assume that Chad knows for sure that he would make $50,000 per year at his current job for the next 3 years. Chad is considering whether to quit h..
Mackenzie Company has a price of $38 and will issue a dividend of $2.00 next year. It has a beta of 1.5?, the? risk-free rate is 5.7%?, and the market risk premium is estimated to be 4.9%. Estimate the equity cost of capital for Mackenzie. Under the?..
All but which of the following are the three primary factors that providers of equity financing are interested in?
What is the firm’s WACC and total corporate value under each capital structure?
Suppose you purchase 750 shares of stock at $35 per share with an initial cash investment of $14,000. The call money rate is 5 percent and you are charged a 1.5 percent premium over this rate. Calculate your return on investment one year later if the..
Ponzi Corporation has bonds on the market with 15.5 years to maturity, a YTM of 7.60 percent, and a current price of $1,063. The bonds make semiannual payments.
What is the profitor loss to a short position if the spot price of the market index rises to $920 at the expiration date?
Suppose two factors are identified for the U.S. economy: the growth rate of industrial production, IP, and the inflation rate, IR. IP is expected to be 6% and IR 5%. A stock with a beta of 1 on IP and 0.4 on IR currently is expected to provide a rate..
If success and failure are equally likely, what is the NPV of the project? Consider the possibility of abandonment in answering.
Which of the following is the same synthetic position as short stock, long call? For CAM loans, lenders take all the interest rate risk.
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