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1. Suppose the market risk premium is 5% and the risk-free interest rate is 2%. Using the data in the table, calculate the expected return of investing in Starbucks Hershey Autodesk Beta 0.80 0.33 1.96 a. Starbucks' stock. b. Hershey's stock. c. Autodesk's stock. a. Starbuck's stock. The expected return of Starbucks stock is ----------%. (Round to two decimal places.)
2. You own three stocks: 600 shares of Apple Computer, 10,000 shares of Cisco Systems, and 5,000 shares of Colgate-Palmolive. The current share prices and expected returns of Apple, Cisco, and Colgate-Palmolive are, respectively, $ 451, $ 21, $91 and 12%, 10%, 8%. a. What are the portfolio weights of the three stocks in your portfolio? b. What is the expected return of your portfolio? c. Suppose the price of Apple stock goes up by $27, Cisco rises by $7, and Colgate-Palmolive falls by $11. What are the new portfolio weights? d. Assuming the stocks' expected returns remain the same, what is the expected return of the portfolio at the new prices? a. What are the portfolio weights of the three stocks in your portfolio? The portfolio weight of Apple Computer is ---------%.(Round to two decimal places.)
What was the arithmetic average return on the stock over this five-year period? What was the standard deviation of the returns over this period?
What is Ace’s present value of the cost of leasing? What is Ace’s Net Advantage to Leasing (NAL)?
You are attempting to value a call option with an exercise price of $105 and 1 year to expiration. The underlying stock pays no dividends, its current price is $105, and you believe it has a 50% chance of increasing to $122 and a 50% chance of decrea..
Erna Corp. has 5 million shares of common stock outstanding. The tax rate is 35 percent. What is the company’s WACC?
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Ford Motor Company is considering launching a new line of Plug-in Electric SUVs. The heavy advertising expenses associated with the new SUV launch would generate operating losses of $35 million next year. The amount that Ford Motor Company owe in tax..
Suppose that you are a manager of ABC Bank. The saving and loan sector of the ABC Bank is engaged in speculative lending but is also exposed to risks by making long-term mortgages that where funded by short-term deposit. this created an interest rate..
The change in capital structure will have no effect on the operations of the firm. Calculate the EPS before and after the change in capital structure.
How are banks likely to adjust their equity ratios when the riskiness of assets changes? Explain.- How do the adjustments affect the sizes of booms and recessions? Explain.
A futures price is currently $60. it is known that over each of the next two three-month periods it will either rise by 10% or fall by 10%. The risk-free interest rate is 8% per annum. What is the value of a six-month European call option on the futu..
Michael Roddick a 27-year-old bachelor Jiving in Charlottesville Virginia, has been a high-school teacher for five years. For the past four months, he's been thinking about buying a Subaru Outback, but he feels that he can’t afford a brand-new one. D..
How to calculate the prices of 1, 3 and 6 month bank accepted bill (BABS)? Identify an example that you see as neuromarketing.
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