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You manage an equity fund with an expected risk premium of 11.2% and a standard deviation of 26%. The rate on Treasury bills is 4.2%. Your client chooses to invest $70,000 of her portfolio in your equity fund and $30,000 in a T-bill money market fund. What is the expected return and standard deviation of return on your client’s portfolio? (Round your answers to 2 decimal places.)
Expected return %
Standard deviation %
An all equity firm generates cash flows (CFFA) of $100 million every year in perpetuity. Based on the risk of the cash flows, a discount rate of 20% is appropriate for the firm. The firm is considering a project that will require an investment of $75..
Suppose that you will receive the annual payments of 10000 for a period of 10 years. The first payment will be made 4 years from now. if the interest rate is 5% what is the present value of the stream of payments.
A self-employed person deposits $1,250 annually in a retirement account that earns 5.5%. What will be the account balance at age 62 if the savings program starts when the individual is age 50?
If you have a rental property that is leased for $1,000 a month for the next 20 years, what could an investor pay for the property if their required rate of return was 11% (assume rent is collected at the end of each month)?
The spot price for gold is $1,300 per ounce. The dividend yield on the S&P 500 is 5.4%. The risk-free interest rate is 7.5%. The futures price for gold for a 3-month contract on gold should be __________.
Describe Open Market Operations in detail (what it is, who uses it, how it is used, why it is used, why it is important, how it affects the economy, etc) Describe the differences between Quantitative Easing and Open Market Operations
Kolby’s Korndogs is looking at a new sausage system with an installed cost of $645,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $103,000. If the..
You own a stock portfolio invested 25 percent in Stock Q, 30 percent in Stock R, 30 percent in Stock S, and 15 percent in Stock T. The betas for these four stocks are .75, 1.13, 1.14, and 1.31, respectively. What is the portfolio beta? (Do not round ..
You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two different salary arrangements. You can have $76,000 per year for the next two years, If the interest rate is 9 percent compounded monthly, what is the..
A portfolio manager in charge of a portfolio worth $50 million is concerned that the market might decline rapidly during the next six months and would like to use options on the S&P 100 to provide protection against the portfolio falling below$45 mil..
Fama's Llamas has a weighted average cost of capital of 9.8 percent. The company's cost of equity is 12 percent, and its pretax cost of debt is 7.8 percent. The tax rate is 40 percent. What is the company's target debt-equity ratio?
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $10 per share dividend 10 years from today ..
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