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Question: APT: Say a given market index (M) is a well-diversified portfolio and has an expected return of 15%. Deviations from this expected return (rM - 15%) can serve as the systematic factor. The T-bill rate is 3%. Say another well-diversified portfolio, call it A, has a beta of 1.5. This means:
E(rA) = 3% + 1.5 (15% - 3%) = 21%
However what if E(rA) = 25%? There is an arbitrage here. What do you do to take advantage of the arbitrage? What do you sell and buy? What is your profit per dollar invested?
A different bond pays 6.5% annual interest once per year, has 9 years to maturity, and a $1,000 par or maturity value. Given the risk level of this bond the market demands a 8.2% interest rate. What is the value of this bond today?
A project costs $101,000 and is expected to generate cash flows of $31,000 per year for the next 15 years. At what rate is the NPV equal to zero?
Find the present values of these ordinary annuities. Discounting occurs once a year. Round your answers to the nearest cent.
Determine expected dividend yield and Capital Gain - Find the expected dividend yield and capital gain yield once Fast Start Inc.'s period of supernormal growth ends.
What is the overall plan? What does Purchasing have to do with the categories? If they do it, then what is the outcome? Would it encounter support or resistance? Create a case to clarify the new structure and the benefits that will be created from ..
A one-year, $100,000 bond carries a coupon rate of 12% and a market interest rate of 12%.ent. The bond requires payment of accrued interest and one-half.
Also assume that investors expect that there is a 4% probability that ByHy corporation will default within the next year and that if it defaults they will only be able to recover 30% of the maturity value of the corporation's bonds.
you invest in an ordinary annuity of 3000 annually at 7 annual interest. what is the future value of the annuity at
ABC had sales of $33,975,000 and an Inventory Turnover Ratio (Sales Basis) of 8.7. ABC projects that next year, its sales will grow by 10 percent.
an investment opportunity requires a payment of 750 for 12 years starting a year from today. if your required rate of
A Sports sales Corporation, the Eisenhower Company in 1956, invested in the stock market the following, Calculate the Beta of this portfolio
Martingale Asset Management L.P. in 2008: 130/30 Funds and a Low Volatility Strategy (Harvard Business School Case 209047-PDF-ENG).
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