Are her husband comments correct or incorrect

Assignment Help Finance Basics
Reference no: EM131126413

Based on a conversation with her husband, Grace is considering selling the $100,000 of ABC stock and acquiring $100,000 of XYZ Company common stock instead.

XYZ stock has the same expected return and standard deviation as ABC stock. Her husband comments, "It doesn't matter whether you keep all of the ABC stock or replace it with $100,000 of the XYZ stock." Are her husband's comments correct or incorrect? Justify your response.

Reference no: EM131126413

Questions Cloud

The comparative accounts payable and long term : Based on this information, what is the amount and percentage of increase or decrease that would be shown in a balance sheet with horizontal analysis?
Describe two reports provided by independent auditors : Describe two reports provided by independent auditors in the annual report to shareholders.
Explain the difference between the sharpe ratio and the trey : Explain the difference between the Sharpe ratio and the Treynor ratio.
Information concerning a stock and the market : You are given the following information concerning a stock and the market
Are her husband comments correct or incorrect : Her husband comments, "It doesn't matter whether you keep all of the ABC stock or replace it with $100,000 of the XYZ stock." Are her husband's comments correct or incorrect? Justify your response.
Discuss some possible causes of the apparent weakening : Favorable business conditions may bring about certain seemingly unfavorable ratios, and unfavorable business operations may result in apparently favorable ratios.
Determine whether the beta of grace new portfolio : Determine whether the beta of Grace's new portfolio, which includes the government securities, will be higher or lower than the beta of her original portfolio. Justify your response with one reason. No calculations are necessary.
Calculate the required return for each stock is each stock : Wilson's own forecasts of the returns on the two stocks are 13.25 percent for Furhman Labs and 11.25 percent for Garten. Calculate the required return for each stock. Is each stock undervalued, fairly valued, or overvalued?

Reviews

Write a Review

Finance Basics Questions & Answers

  Assume that an investor sells short 200 shares of stock at

assume that an investor sells short 200 shares of stock at 75 per share. at what price must the investor cover the

  Should be willing to pay per share to acquire laces ltd

Using the WACC-DCF approach, how much should Shoes Inc. should be willing to pay per share to acquire Laces Ltd?

  Outstanding bonds that mature

Alaskan Motors has outstanding bonds that mature in 13 years and pay $34.50 every 6 months in interest. The par value is $1,000 per bond and the market value is $990. The coupon rate is _____ percent, the current yield is _____ percent, and the yi..

  What is the maximum profit and the maximum loss

Graph the profit potential (if any) for this position. What is the maximum profit and the maximum loss the trader can incur? At what price of the stock does the diagonal spread break-even?

  Hamada equation allows the firm to

1. The Hamada Equation allows the firm to:

  What is the current yield

1. The ABC Co. has $1,000 face value bond outstanding with a market price of $937.6. The bond pays interest annually, matures in 9 years, and has a yield to maturity of 10.7 percent. What is the current yield?

  Draw a freehand curve that best fits the data

9. You have been presented with the following cost data and asked to fit a statistical cost function: Quantity Total Cost 10 104.0 20 107.0 30 109.0 40 111.5 50 114.5 60 118.0 70 123.0 80 128.5 90 137.0 100 150.0 a. Plot the data on a graph, and draw..

  How do you find rate of return in annuity

For example if someone purchases for $21,000 and will receive $2,000 per year for 20 years what will their return be?

  Compute the current yield on bond

An investor must choose between two bonds: Bond A pays $72 annual interest and has a market value of $925. It has 10 years to maturity. Bond B pays $62 annual interest and has a market value of $910. It has two years to maturity. Compute the curre..

  Find the payback period for the project

Rutledge, Inc. has invested $100,000 in a project that will produce cash flowsof $45,000, $37,000, and $42,950 over the next three years. Find the payback period for the project.

  Calculation of multiple cash flows for a year

Calculation of multiple cash flows for a year and the amount of the annuity shown below is the amount of each individual cash flow

  A treasury bond futures contract change

1. By what amount will the market value of a Treasury bond futures contract change if interest rates rise from 5 to 5.25 percent? The underlying Treasury bond has a duration of 10.48 years and the Treasury bond futures contract is currently being ..

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!

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