Expected rate of return for an investment

Assignment Help Financial Management
Reference no: EM131333425

The expected rate of return for an investment in a cell phone company is 24%, and the standard deviation is 9%. Anter investment opportunity, however, offers a 30% expected rate of return with a standard deviation of 15%. Which of the following statements is LEASR likely?

both assets may have a 15% return

both assets may have a 25% return

both assets may have a 30% return

both assets may have a 45% return

Reference no: EM131333425

Questions Cloud

Decide to resell the equipment at that point in time : You just purchased some equipment that is classified as 5-year property for MACRS. The equipment cost $163,000. What will the book value of this equipment be at the end of 4 years should you decide to resell the equipment at that point in time? Do no..
Calculate the standard deviation of the portfolio : Calculate the standard deviation of the portfolio described in the table below. Assume that the correlation between the two assets is 25%
What amount should be used initial cash outflow for projet : Sea Maters Inc. purchased a lot in Phenix City 6 years ago at a cost of $290,000. Today, that lot has a market value of $470,000. At the time of the purchase, the company spent $8,000 to improve the site for a future use. What amount should be used a..
Suppose the returns on long-term government bonds : Suppose the returns on long-term government bonds are normally distributed. Assume long-term government bonds have a mean return of 6.7 percent and a standard deviation of 10 percent. What is the probability that your return on these bonds will be le..
Expected rate of return for an investment : The expected rate of return for an investment in a cell phone company is 24%, and the standard deviation is 9%. Anter investment opportunity, however, offers a 30% expected rate of return with a standard deviation of 15%. Which of the following state..
What is the firm horizon or continuing and value : A company recently paid a dividend, D0, of $1.25. It expects to have nonconstant growth of 30% for 2 years followed by a constant rate of 7% thereafter. The firm's required return is 19%. What is the firm's horizon, or continuing, value? What is the ..
Willing to pay as a lump sum today to buy this annuity : The Good Life Insurance Co. wants to sell you an annuity which will pay you $770 per quarter for 25 years. You want to earn a minimum rate of return of 6.2 percent. What is the most you are willing to pay as a lump sum today to buy this annuity?
Highly correlated with the new york stock exchange : If a portfolio is highly correlated with the New York Stock Exchange then
How many years is it until bond matures : The Lo Sun Corporation offers a 5.2 percent bond with a current market price of $865.50. The yield to maturity is 6.24 percent. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures?

Reviews

Write a Review

Financial Management Questions & Answers

  Corporate bond outstanding-what is the bond value

Amcor limited has a corporate bond outstanding with a 7% coupon semi annual interest 15 years to maturity and face value of $1000.similar bond currently yield 13% but prior agreement company will skip the coupon payments in years 6,7 and 8 (6 payment..

  Antitrust policy can preclude the acquisition of competitor

Antitrust policy can preclude the acquisition of a competitor. The dividend yield is the cash dividend divided by the current market price of the stock. Basic earnings per share include all convertible bonds outstanding.  Investors will generally cho..

  Revenue models implemented by encyclopedia britannica

Encyclopedia Britannica is a company that has transferred its existing reputation for high quality to the World Wide Web. Encyclopedia Britannica started in 1768 and it developed its respected brand over its years of publishing.  What are the two rev..

  What is minimal annual inventory cost of current strategy

Harley Davidson purchases components from three suppliers. Components purchased from Supplier A are priced at $ 5 each and used at the rate of 200000 units per year. Components purchased from Supplier B are priced at $ 4 each and are used at the rate..

  What is its self-supporting growth rate

Maggie's Muffins, Inc., generated $2,000,000 in sales during 2013, and its year-end total assets were $1,500,000. Also, at year-end 2013, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and ..

  Project that will result in initial aftertax cash savings

Scanlin, Inc., is considering a project that will result in initial aftertax cash savings of $1.84 million at the end of the first year, and these savings will grow at a rate of 1 percent per year indefinitely. What is the maximum initial cost the co..

  Mature manufacturing firm

Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $10.65, but management expects to reduce the payout by 5 percent per year indefinitely. If you require a return of 12 percent on this stock, what will you pay for a sha..

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Estimate model and test hypothesis there is no friday effect

Is there a Friday effect on the daily simple returns of Dell stock? Estimate your model and test the hypothesis that there is no Friday effect. Draw your conclusion.

  Upcoming project to provide annual cash inflows

You expect your upcoming project to provide annual cash inflows of $3,700, $5,200, and $8,000 at the end of each year for the next three years. If your discount rate is 8%, what is the present value of these cash flows?

  Researcher theorizes that people become pessimistic

Rodney the researcher theorizes that people become pessimistic on Friday the thirteenth. Consequently, he studies the data on the stock market to see what happens to the average return on Friday the thirteenth for the last 40 years. He finds that the..

  Adjustable gross income-federal income tax

A single young person had an adjustable gross income (AGI) of 68,000$ and allowable itemized deductions of 5,000$ in 2012. Compute the 2012 federal income tax:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd