User Account

All Pages

What is the minimum total risk index

Assignment Help Financial Management
Reference no: EM131337923

1) In August 2011, Bank of Hawaii (BOH) stock cost $45 per share, yielded 4% per year in dividends, and had a risk index of 3.0 per share, while JPMorgan Chase (JPM) stock cost $40 per share, yielded 2.5% per year in dividends, and had a risk index of 2.0 per share.† You have up to $25,000 to invest in these stocks, and would like to earn at least $760 in dividends over the course of a year. (Assume the dividends to be unchanged for the year.) How many shares (to the nearest tenth of a unit) of each stock should you purchase to meet your requirements and minimize the total risk index for your portfolio? What is the minimum total risk index?

2) The Megabuck Hospital Corp. is to build a state-subsidized nursing home catering to homeless patients as well as high-income patients. State regulations require that every subsidized nursing home must house a minimum of 740 homeless patients and no more than 900 high-income patients in order to qualify for state subsidies. The overall capacity of the hospital is to be 2,400 patients. The board of directors, under pressure from a neighborhood group, insists that the number of homeless patients should not exceed twice the number of high-income patients. Due to the state subsidy, the hospital will make an average profit of $9,700 per month for every homeless patient it houses, whereas the profit per high-income patient is estimated at $7,700 per month. How many of each type of patient should it house in order to maximize profit?

Reference no: EM131337923

Questions Cloud

Funds of her own she must put into project to get financing : An entrepreneur needs funds for a project. She has funds of her own, but not enough to cover the required investment of $100. If the entrepreneur doesn't misbehave, the project will succeed with probability .9, yielding a gross return of 120 in one y..
Does the machine have any future worth if the interest rate : An engineer is considering the purchase of a copy machine for his/her consulting office. The copy machine will cost $2, 000 and have a resale value of $400 at the end of its 5-year life. Having the machine in the office will reduce copy costs by $1, ..
Compute the monthly payment : An individual is considering the purchase of a used automobile. The total price is $6200 with $1240 as a down payment and the balance to be paid in 48 equal monthly payments with interest of 12% compounded monthly. The payments are due at the end of ..
Standard deviation of the rate of return on this investment : A project has a 0.52 chance of doubling your investment in a year and a 0.48 chance of halving your investment in a year. What is the standard deviation of the rate of return on this investment?
What is the minimum total risk index : In August 2011, Bank of Hawaii (BOH) stock cost $45 per share, yielded 4% per year in dividends, and had a risk index of 3.0 per share, while JPMorgan Chase (JPM) stock cost $40 per share, yielded 2.5% per year in dividends, and had a risk index of 2..
Return on your investment in lion equity : Lion Equity paid an annual dividend of $3.25 per share last month, and it is anticipated that future dividends will increase by 4% annually. As a shareholder, if you require a 11% return on your investment in Lion Equity, how much are you willing pay..
What should the stock be currently selling for : Charming Shoppes will pay an annual dividend of $2.50 next year with future dividends increasing by 4% annually. If the market rate of return on this stock is 12%, what should the stock be currently selling for? The Clark Group pays an annual dividen..
At what price will the stock reach equilibrium : A share of stock with a beta of .77 now sells for $50. Investors expect the stock to pay a year-end dividend of $3. The T-bill rate is 4%, and the market risk premium is 8%. Suppose investors believe the stock will sell for $52 at year-end. Is the st..
What foreign exchange exposures do your company have : There is an increasing demand in the US to learn Spanish because many students want to study abroad in Latin American countries and an increase Hispanic population in the US. What foreign exchange exposures do your company have? How does peso depreci..

Reviews

Write a Review

Financial Management Questions & Answers

  Issue of preferred stock-what is the required return

Moraine, Inc., has an issue of preferred stock outstanding that pays a $3.15 dividend every year in perpetuity. If this issue currently sells for $92 per share, what is the required return?

  Put with the same strike and expiration date sells

A call option currently sells for $8.25. It has a strike price of $50 and three months to maturity. A put with the same strike and expiration date sells for $6.25. If the risk-free interest rate is 6 percent, what is the current stock price?

  Your position after the split will be

The current stock price of Ruff Co. is $60 and you own 500 shares of the stock. If the company splits its stock 3-for-1, your position after the split will be:

  An asset has had an arithmetic return

An asset has had an arithmetic return of 10.9 percent and a geometric return of 8.9 percent over the last 88 years. What return would you estimate for this asset over the next 8 years? 22 years? 29 years? Enter as percentages.

  What is the npv of the projec

Given the following information and assuming a CCA rate of 20%, what is the NPV of this project?- Initial investment = $400,000; -  life = five years;

  Offered some securities for sale to the public

In March 2012, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $500 in March 2037, but investors would receive nothing until then. ..

  Net income-cost of goods sold-gross profit-retained earnings

Which statement will each of the following appear on Income statement, Balance sheet, or Neither? Net income. Cost of goods sold. Gross profit. Retained earnings. Paid-in capital in excess of par

  Which factor listed below is not considered external factor

Successful business analysis relies on the analyst’s ability to understand all aspects of the internal and external environment of the business. There are many external factors to consider in such an analysis. Which factor listed below is not conside..

  What is your after tax rate of return

Suppose you invest $100 today, your return for the year is $25, and your tax rate is 20%. what is your before tax rate of return? how much money did you earn after taxes? what is your after tax rate of return?

  Compute the equivalent annual annuity of project

Johnson Jets is considering two mutually exclusive projects. Project A has an up-front cost of $122,000 (CF0 = -122,000), and produces positive after-tax cash inflows of $30,000 a year at the end of each of the next six years. Compute the equivalent ..

  Hardware paid an annual dividend

Miller Brothers Hardware paid an annual dividend of $0.95 per share last month. Today, the company announced that future dividends will be increasing by 2.6 percent annually. If you require a 13 percent rate of return, how much are you willing to pay..

  Discounted payback period approach

Bob suggested Brody consider using the “discounted payback period approach” and the “Profitability Index Model (PI)”. Bob asked Brody, what is you cost of capital? Brody said, I can raise half from stock (about a 4% cost) and the remaining half from ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd