**Question: **Suppose that a random sample of size 20 is taken from a normal distribution with unknown mean and known variance equal to 1, and the mean is found to be x¯ = 10. A normal distribution was used as the prior for the mean, and it was found that the posterior mean was 15 and the posterior standard deviation was 0.1. What were the mean and standard deviation of the prior?

## Which formal method of risk adjustment do firms useWhat are two reasons for the increased use of risk analysis in capital budgeting? Explain. |

## What is the future value of prizeWhat is the future value of this prize if each payment is put in an account earning 0.09? |

## What is the cross-rate in terms of yen per poundSuppose the cross-rate is ¥150 £1. Is there an arbitrage opportunity here? If there is, explain how to take advantage of the mispricing. |

## Calculate the present value of growth opportunitiesThe market consensus is that SuperSmart Corporation has ROE = 16% and a beta of 1.25, and an expected earnings per share (E1) of $3.16. The market believes that Super Smart Corporation plans to maintain indefinitely its retention ratio. |

## Create a worksheet for each scenarioWhat is the NPV for each scenario? Based on your results, should the firm undertake the project? |

## Unrealized loss on investmentsFurriers purchased 1000 shares of Loose Corporation stock on January 10, 2005, for $800 per share and classified the investment as securities Available for Sale. |

## Pair each item from list a with the item from list bListed below are several terms and phrases associated with the measurement process for external transactions. |

## What are the net operating cash flows in years 1, 2, and 3The spectrometer would have no effect on revenues, but it is expected to save the firm $25,000 per year in before-tax operating costs, mainly labor. The firm's marginal federal-plus-state tax rate is 40%. |

## Identify at least one new financial instrument that has becoIs the Sarbanes-Oxley Act of 2002 justified and important or overly costly for companies and in need of amendment or repeal? Why? Identify at least one new financial instrument that has become popular in the recent past for either investors or issuin.. |

## Calculate the venture enterprise valueAssume a venture has a perpetuity enterprise value cash flow of $800,000. Cash flows are expected to continue to grow at 8 percent annually and the venture’s WACC is 15 percent. A. Calculate the venture’s enterprise value. B. If the venture has $2 mi.. |

## What will the market value will beThe company decide to issue 100 million debt to issue a project that has a NPV of 20 million. What will the market value will be? |

## Sally was looking at mackenzie cdn growthSally was looking at MacKenzie Cdn Growth A. Go to the Morningstar website (investment research firm at www.morningstar.ca), and find the following to help Sally evaluate this MacKenzie Mutual Fund.What are the MER fees charged for this fund? What is.. |

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