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A. Suppose Intel's stock has an expected return of 10% and a volatility (standard deviation) of 5%, while Coca-Cola's has an expected return of 5% and volatility of 2%. Assume these two stocks have correlation coef?cient -1.
1. Calculate the portfolio weights that remove all risk.
2.If there are no arbitrage opportunities, what is the risk-free rate of interest in this economy?
B. A biotech company has a drug in development that will allow you to sell your ?rm for $10 billion next year. Assume your boss wants you to use the CAPM. Your ?rm has a beta of 4, the risk-free rate is 5% per year, and the equity premium is 2% per year. What do you think the ?rm is worth today?
C. Your borrowing rate is 15% per year. Your lending rate is 5% per year. The project costs $1,000 and has a rate of return of 10%.1. Assume you have $500 of your own money to invest. Should you invest in this project?
it’s that season again! You have engaged in a market study to categorize your patients’ willingness to pay for their flu shot into 8 equal sized groups: $40, $35, $30, $25, $20, $15, $10, $5). All of your costs are fixed except labor and materials, w..
Let's talk about companies that provide excellent customer service, and those that do not. Specifically, we are looking at a company's overall reputation, not our individual complaints or experiences. How did these companies earn their good or bad re..
Explain why the intergenerational correlation of earnings would likely become higher or lower for the following policy changes in the united states:
Has the U.S. economy achieved full employment equilibrium yet (let’s say within 0.1%)? Explain how we define ‘full employment’ and how you can tell whether or not that goal has been achieved. find the most recent estimate of the actual unemployment r..
Which of the following would cause a movement along the supply curve (that is,a change in the quantity supplied)for hot dogs check all that apply
Firms in perfect competition will leave the industry if they
Suppose we refused to sell goods to any country that reduced or halted its exports to us. Who would benefit and who would lose from such retaliation. What could you suggest alternative ways to ensure import supplies.
Many people have argued about the wisdom of the "TARP" program that was implemented late in the Presidential term of President George W. Bush with the full approval of the Congress. Briefly comment on the impact on the economy of this effort and expl..
Why are standards needed in data communication and networking? What are the advantages and disadvantages of standards? How do standards fit in with regulations at the federal, manufacturing, and organizational levels? Give an example of a standard..
Massive Products, Inc., is a monopolist whose cost of production is given by 10Q+Q^2 which means its MC=10+2Q. Demand is Q=200-2P. What price will the monopolist charge, and what profits will the monopolist earn? What will the consumer surplus be? Wh..
What are the three types of mergers that firms can do? Classify the following possible mergers between Starbucks and coffee growers, Bank of America and Fleet Bank, Microsoft and Steel company, Home Depot and Lowe's, into one of the three types. Expl..
q. 1. does the mincer model take unequal access to education into account? discuss the shortfalls of this model in that
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