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ABC Inc. requires government approval for any new product it introduces. Its marketing department is evaluated on the revenue generated by new products developed by the R&D department relative to budgeted projections. the budgeted projections are based on the estimated date of government approval for the new products. accordingly, if the government approval is delayed, it can cause the marketing department to fall short of its revenue projections. the marketing department frequently complains to upper management about any perceived delays in the regular approval process. The marketng department's complaint usually focuses on the argument that the regulatory department is understaffed and unable to obtain approval on a timely basis.
a) What kind of centers would you call the marketing and regulatory departments?
b) How would you evaluate the two centers?
Show how to synthetically construct the Arrow–Debreu securities, as well as the risk-free asset using assets A, B and C.
What is the clean price of the bond?
A bond has coupon rate=5%, YTM=8%, and maturity=5 years. what do you expect the dividend yield and capital gains rate to be?
An investor has put money in four stocks in the dollar amounts indicated and with betas specified. What is the portfolio beta?
Suppose you make $500 monthly deposits into a tax-deferred retirement plan that pays interest at a rate of 10% per year compound quarterly. Suppose that money deposited during a quarter will not earn any interest. What is the balance at the end of 20..
The MoMi Corporation’s income before interest, depreciation and taxes, was $2.4 million in the year just ended, and it expects that this will grow by 5% per year forever. To make this happen, the firm will have to invest an amount equal to 18% of pre..
List four things you should consider when buying a mutual fund.
As in question 25, Duller Image has issued a bond that matures in 15 years. The bond has a par value of $1,000 and sells for $1,075. The bond has a 7 percent annual coupon rate. The coupon payments are made annually. However, this time assume that th..
Your friend Danni is working in the CFO’s office for MacroHard Inc. Danni’s boss uses the CAPM to estimate the firm’s cost of capital, but Danni remembers from FINA 4210 the Fama-Fench 3 factor model. Outline what the Fama-French 3 factor model is.
Calculate the arithmetic mean return and the geometric mean return of full-year returns from 2005-2015.
Parks Promotions, Inc. is able to borrow at an interest rate of 11 percent for one year. During that year, market participants expect 6 percent inflation. What approximate real rate of return does the lender expect?
the bonds have a $1,000 par value and a coupon rate of 10%. What is the yield to maturity at a current market price of $855?
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