Stock A has an expected rate of return of 12% and a standard deviation of returns of 40%. Stock B has an expected rate of return of 18% and a standard deviation of returns of 60%. The correlation coefficient between the returns of Stock A and Stock B is 0.30. Compute the Sharpe Ratio of a portfolio formed by investing 40% of wealth in A and the remaining wealth in B. Assume that the risk free rate of return is 0%

What was its operating profit margin : In 2014 Electric Autos had sales of $165 million and assets at the start of the year of $280 million. If its return on start-of-year assets was 10%, what was its operating profit margin? |

What is the value x that must be deposited into the account : A father wants to set up a bank acount that will pay his daughter $18,000 at the end-of-quarter (EOQ) 4 and $32,000 at EOQ 8. He will fund this account by making quarterly payments of $x from the present (time zero) through EOQ 7. a) Draw a cash-flow.. |

What is the bonds yield to maturity : Suppose a ten-year, 1,000 bond with an 8.8% coupon rate and semi annual coupons is trading for 1,034.65. What is the bond's yield to maturity (expressed as an APR with semi annual compounding)? If the bond's yield to maturity changes to 9.5% APR, wha.. |

Coupon rate and semi annual coupons is trading : Suppose a ten-year, 1,000 bond with an 8.8% coupon rate and semi annual coupons is trading for 1,034.65. What is the bond's yield to maturity (expressed as an APR with semi annual compounding)? If the bond's yield to maturity changes to 9.5% APR, wha.. |

Standard deviation of returns and expected rate of return : Stock A has an expected rate of return of 12% and a standard deviation of returns of 40%. Stock B has an expected rate of return of 18% and a standard deviation of returns of 60%. The correlation coefficient between the returns of Stock A and Stock B.. |

Medical insurance for your family : You have medical insurance for your family with a $250 deductible, 20% coinsurance, and $1,500 OOP maximum for each individual and $3,000 family OOP maximum. Calculate your OOP costs if you incur $6,000 in medical costs. |

Describe the concept of incremental cash flows : Eureka Bottling Company was established in 1992 by Josie Smith. The company was extremely successful at the beginning of the 21st century, but sales have waned since then. In an attempt to rejuvinate EBC's sales, Ms. Calculate the weighted average co.. |

What is the percentage price change of these bonds : Bond J has a coupon rate of 5 percent and Bond K has a coupon rate of 11 percent. Both bonds have 18 years to maturity, make semiannual payments, and have a YTM of 8 percent. What if rates suddenly fall by 2 percent instead? If interest rates suddenl.. |

Project will produce no cash flows for the first two years : EEG, Inc. is considering a new project that will require an initial cash investment of $388,000. The project will produce no cash flows for the first two years. The projected cash flows for years 3 through 7 are $69,000, $88,000, $125,000, $140,000, .. |

## What must the expected return on this stockA stock has a beta of 1.20, the expected return on the market is 14 percent, and the risk-free rate is 4.50 percent. What must the expected return on this stock be? |

## Idiosyncratic factors affecting the stock priceYou run a $100M stock portfolio that has a beta of 1.50. The S&P 500 Index is currently at 1,600 and you expect the general market to be very volatile over the next six months. You are expecting to capture an alpha of 0.5% every month. The risk free .. |

## Calculate the forward priceA stock is expected to pay a dividend of $2.40 per share in 1 months and in 4 months. The current stock price is $51, and the risk-free interest rate is 7% per annum with continuous compounding for all maturities. An investor has just taken a long po.. |

## Compute the present value of opportunityYou are due to receive ten annual payment of $1500 each,the first payment to be received 5 years from now. You can invest each of these payments into an account that offers a 4 percent, semi-annual interest rate. Compute the present value ( t=0) of t.. |

## Explain bankruptcy and its equity holders will be wiped outSuppose the funds to purchase or lease the plane will come from equity holders (for ex-ample, by reducing the amount of Western's current dividend). Western also has one-year debt outstanding, and there is a 10% (risk-neutral) probability that ove.. |

## Explain how banks move loans off the balance sheetExplain how banks move loans off the balance sheet. What motivates different types of off balance sheet activities? Discuss the risks these actions involve. |

## Firms liability-generating adequate operating profitabilityWhich ratio is used in both measuring firm's liability and generating adequate operating profitability? a. average collection period b. operating profit margin c. acid-test ratio d. inventory turnover e. a and d |

## Performing in the areas of profit-debt and asset turnoverCompare and contrast the two companies in terms of how well or how poorly they are performing in the areas of profit, debt, and asset turnover. Use appropriate ratios in your analysis. Indicate strategies for possible improvement in each area. the co.. |

## What is the banks cost of preferred stockSixteenth Bank has an issue of 6% preferred stock with a $100.00 par value that just sold for $89 per share. What is the bank’s cost of preferred stock? (Show your work and round your answer to two decimal places). |

## The securitys marketability and liquidityWhat is an IPO, and what role does an investment banker play in the process? Suppose you own a security that you know can be easily sold in the secondary market, but the security will sell at a lower price than you paid for it. What would this mean f.. |

## Are benefits of further education worth associated costsLong-term investment decision, NPV method Jenny Jenks has researched the financial pros and cons of entering into a 1-year MBA program at her state university. The tuition and books for the master’s program will have an up-front cost of $50,000. find.. |

## Which is more important to shareholders of a companyWhich is more important to shareholders of a company: the book value of equity or the market value of equity? Explain why? |

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