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Question: Assume that an individual can either invest all of her resources in one of two securities A or B; or alternatively, she can diversify her investment between the two. The distribution of the returns are as follows:
Assume that the correlation between the returns from the two securities is zero.
a. Calculate each security's expected return, variance, and standard deviation.
b. Calculate the probability distribution of the returns on a mixed portfolio comprised of equal proportions of securities A and B. Also calculate the expected return, variance, and standard deviation.
c. Calculate the expected return and the variance of a mixed portfolio comprised of 75% of security A and 25% of security B.
a. Calculate the NPV of this investment opportunity. Should the company make theinvestment? b. Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged.
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Emily, age 58, has been a participant in the Icon, Inc. ESOP for 15 years. She plans to retire at age 65. How much must Icon allow Emily to diversify this year?
valuing bonds the morgan corporation has two different bonds currently outstanding. bond m has a face value of 30000
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You take out a $800,000 amortized loan for your new beach house. You will make equal annual payments at the end of each of the next 10 years. The interest rate is 8%. How much of the first annual payment will be principal reduction?
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