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Consider the following scenario analysis: Rate of Return Scenario
Probability Stocks Bonds
Recession .20 −6 % +17 %
Normal economy .50 +20 +8
Boom .30 +29 +6
a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? Yes No
b. Calculate the expected rate of return and standard deviation for each investment. (Do not round intermediate calculations. Round your answers to 1 decimal place.) Expected Rate of Return Standard Deviation Stocks % % Bonds % % c. Which investment would you prefer? Stocks Bonds
The cost of the machine is $300,000, machine installation cost of $15,000 and transportation cost of $5,000. It has four year life. At the end of four years, the firm expects to sell the machine for $35,000. The firm uses the straight line method of ..
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assume that the availability heuristics makes people more risk averse populations drop at least in the short term.
The Plastic Corporation has a current capital structure consisting of $150,000 of 15% debt and 3,500 shares of common stock. The tax rate is 40%. Determine the earnings per share (EPS) when EBIT is $75,000 and $99,500. Calculate the degree of financi..
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Skye Flyer, Inc., has weekly credit sales of $15,900, and the average collection period is 61 days. What is the average accounts receivable figure?
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