Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
You've just won a huge $100 million lottery. You've decided to invest your winnings in the following way: $30 million in real estate, $30 million in corporate bonds and $40 million in equities. For the equities you've identified 4 possible investments (A, B, C & D) that interest you. Based on your level of tolerance for risk, your equity portfolio needs to have an average beta that is 30% higher than the beta of the market portfolio.
(a) You invest $5 million in investment A which has a beta of 0.6 and $8 million in B which has a beta of 0.9. If C has a beta of 1.7 and D is assumed to have no risk, then how much would you invest in C & D?
(b) Assume that equities A, B & C are priced correctly. If the rate of return on D is 3% and the average market risk premium is 4%, what is the rate of return on each of A, B & C?
(c) You've also identified 3 other equities (X, Y & Z). Calculate their actual returns using the dividend discount model and compare this to their expected returns using CAPM. Which of the investments is (are) correctly priced, underpriced or overpriced? Which one(s) would lie on the SML (Security Market Line), above the SML or below the SML.
Discounted cash flow analysis is the term employ to describe the technique whereby the value of future cash flows is discounted back to a present value so that the monetary values
Q. Explain Compound Value of an Annuity? Compound Value of an Annuity: - Annuity demotes to the periodic flows of equal amounts. FV = A {(1+i)n - 1}/i Instance: - Mr. X i
Inventory is sometimes thought of as a necessary evil. Explain. Inventory ties up funds and these funds aren't earning an unambiguous return. Some inventory is habitually nec
When a company issues new securities, how do flotation costs affect the cost of raising that capital? When a company issues fresh securities flotation costs, enhance the cost o
K is a kitchen and bathroom design and installation company which currently has showrooms in one region only of Country T. The company has enjoyed considerable success since it was
In Time Series Analysis, we try to identify and determine the pattern of changes in the data collected over regular intervals of time. The data collected can be at a periodical int
Implementing Systems Effectively: Much of the accounting process has been taken over by office automation systems. Whereas once the vast majority of bookkeeping and reporting t
How do tax considerations affect the cost of debt and the cost of equity? For the reason that interest on debt is tax deductible to the issuing firm, the higher the tax rate th
Types of Government Stocks Issue of Stock through AuctionThe RBI, on behalf of the government, issues notification to auction government securities, stating the amount and time
Current Yield Current yield is defined as the annual coupon interest received on the market price. Current Yield =
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd