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1. Briefly explain the concepts of stand-alone risk, diversifiable risk and market risk.
2. Find the weighted average Beta coefficient for a combined portfolio consisting of the two companies you are using for your final investment project.In order to do this you must find the Beta for each of your companies - use one of the online financial sites (yahoo finance, msn money, etc...).Assume that you are 60% weighted in one stock and 40% in the other.Multiply the percentage of each holding as a decimal, times that companies Beta.Add up the Betas.
Example Using Two Stocks:Total portfolio of $100,000 $40,000 PDQ - Beta - 1.5 (40,000/100,000 = .4 (40%) $60,000 OMG - Beta .8(60,000/100,000 = .6 (60%) = .4 * 1.5 = .6& .6 * .8 = .48 The combined Beta for this hypothetical portfolio would be 1.08Has diversification helped to lower your risk?(In the case of your two stocks you are not very well diversified as both companies should be in the same industry - but this same technique can be used in just about every case.)
Firm C Common Stock is $ 4.00 Per Share. what is the % Cost of Equity on Firm C Common Stock ?
Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 5% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with a 9% coupo..
What is the firm’s weighted average cost of capital (WACC2) if it has to issue new common stock?
Assume the following ratios are constant. Total asset turnover = 2.30 Profit margin = 5.8 % Equity multiplier = 1.77 Payout ratio = 35 % Required: What is the ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 d..
PK Software has 8.5 percent coupon bonds on the market with 24 years to maturity. What is the current yield on PK's bonds?
Describe how an arbitrage situation could be developed for a profit when you either sell or buy one of the two year coupon bonds
Treasury bills are currently paying 5 percent and the inflation rate is 3.2 percent. What is the approximate real rate of interest? What is the exact real rate?
What would the cost of equity be if the debt–equity ratio were 1.0? What is the company’s unlevered cost of equity capital?
You own your own? firm and you want to raise $30 million to fund expansion.? what fraction of equity will you need to sell to raise the remaining $15 ??million?
What is the present value of the? revenues? What is the present value of the maintenance? costs?
As a gift to your parents on their anniversary, What do you think is a fair price for such a Put Option?
Determine the 2 day incremental holding costs for shipping 75 boxes of parts when each box has a price of $235 and holding costs are 27% of the total shipment value. The shipping costs are $335 for 1 day and $290 for 3 days.
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