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There is an investment opportunity set where the optimal risky portfolio O has expected rate of return of 10% and volatility (or standard deviation) of 20%, and cash yields a risk- free rate of 2%.
a) One investor chooses to invest 50% in the portfolio O and 50% in cash. Compute the expected return and volatility of her portfolio, and its Sharpe ratio.
b) A second investor has an expected rate of return target of 12%. Compute the composition of her portfolio, and its Sharpe ratio.
c) A third investor has a volatility target of 15%. Compute the composition of her portfolio, and its Sharpe ratio.
Evaluate the two choices in terms of their effect on the price per share of stock and shareholder wealth.
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At year-end 2013, Wallace Landscaping’s total assets were $1.4 million and its accounts payable were $415,000. Sales, which in 2013 were $2.6 million, are expected to increase by 30% in 2014. What was Wallace's total long-term debt in 2013? How much ..
Suppose firm A has a share price of 20€ and 110 million shares outstanding. Shareholders' total wealth?
Find the delta of the call and put options.
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