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You are a portfolio investor and, for simplicity, are investing in only two assets. You must invest in one asset(called Asset A) and then choose one additional asset from a choice of 3 assets. The asset you must invest in has a variance of 0.09. Now, you must choose 1 asset from the following 3.
i) asset B has a variance of 0.04 and a correlation of 0.90 with Asset A.
ii) Asset C has a variance of 0.04 and a correlation of 0.45 with Asset A.
iii) Asset D has a standard deviation of 0.25 and a correlation of 0.35 with Asset A.
Assume equal weights in Asset A and the 2nd asset you choose. You are to choose the asset that provides you the lowest portfolio risk. Which asset do you choose?
Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm currently has four divisions, A through D, with average betas for each division of 0.9, 1.1, 1.3, and 1.5, respectively. Assume all current and future proje..
An investment offers a 16 percent total return over the coming year. Fred Bernanke thinks the total real return on this investment will be only 12 percent.
What is the net present value and payback period for the project?
How do I calculate expected return rate on stocks?
Total depreciable value of the new equipment, P 665,000. Installation cost P 50,000, transportation cost, P 15,000. how much is the net cash savings.
calculate the required return on King Farm Manufacturing’s common stock.
Carter & Carter (C&C) is considering a project that requires an initial cash outlay for equipment of $6.3 million. The equipment will be depreciated to a zero book value over the 4-year life of the project. At the end of the project, C&C expects to s..
You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two different salary arrangements.
The first comic book featuring Superman was sold in 1938. In 2014, this comic book was sold for $3.2 million on EBay.
Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,054,000 and will last for six years. Variable costs are 35 percent of sales, and fixed costs are $200,000 per year. Calculate the EAC for..
Shanken Corp. issued a bond with a maturity of 15 years and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 95 percent of its face value. The book value of the debt issue is $60 million. What is the company’s total mar..
Explain in detail how financial systems have changed over the past 500 years. Give at least (3) specific statements and explain thoroughly.
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