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You have $110,000 to invest in a portfolio containing Stock X, Stock Y, and a risk-free asset. You must invest all of your money. Your goal is to create a portfolio that has an expected return of 10 percent and that has only 74 percent of the risk of the overall market. If X has an expected return of 30 percent and a beta of 2.0, Y has an expected return of 20 percent and a beta of 1.2, and the risk-free rate is 4 percent, how much money will you invest in Stock Y? (Do not round intermediate calculations. Round your answer to the nearest whole dollar.)
Amount $
Alabaster Incorporated wants to be levered at a debt to value ratio of .6 . The cost of debt is 9%. the tax rate is 35% and the cost of equity for an all equity firm is 12%. What will be Alabaster's cost of equity?
Sun Lee’s is considering two mutually exclusive projects that have been assigned the same discount rate of 10.5 percent. Project A has an initial cost of $54,500, and should produce cash inflows of $16,400, $28,900, and $31,700 for Years 1 to 3, resp..
Tierney Enterprises is constructing its cash budget. Its budgeted monthly sales are $7,000, and they are constant from month to month. 40% of its customers pay in the first month and take the 2% discount, while the remaining 60% pay in the month foll..
Laser Optics will pay a common stock dividend of $7.10 at the end of the year (D1). The required rate of return on common stock (Ke) is 18 percent. The firm has a constant growth rate (g) of 8 percent. Compute the current price of the stock (P0).
The Treasury department issued a 10-year bond on January 1, 2015. The par value is $1,000 and the annual coupon rate is 10%. The bond pays two coupons every year, one at the end of June and one at the end of December. The required annual yield is 8%...
Joey realizes that he has charged too much on his credit card and has racked up $3,900 in debt. If he can pay $175 each month and the card charges 16 percent APR (compounded monthly), how long will it take him to pay off the debt? (Do not round inter..
Suppose you are creating a butterfly spread using call options with 3 different strike prices. Currently, the call price with strike price of $40 is $21.77, the call with strike price of $50 is $10.73, and the call with strike price of $60 is $6.23. ..
You are planning your retirement in 10 years. You currently have $176,000 in a bond account and $616,000 in a stock account. You plan to add $6,400 per year at the end of each of the next 10 years to your bond account. How much can you withdraw each ..
A bond with an annual coupon of $70 and originally sold at par for $1,000. The current market interest rate (yield to maturity) is 8%. This bond will sell at _______. Assuming no change in market interest rates, the bond will present the holder with ..
Do you believe that corporate takeover defenses are more motivated by the target's managers attempt to entrench themselves or to negotiate a higher price for their shareholders? Illustrate your points with real life situations.
You short sold 600 shares of stock at a price of $43 and an initial margin of 60 percent. If the maintenance margin is 30 percent, at what share price will you receive a margin call? What is your account equity at this stock price?
Blackstone, Inc. is considering expanding operations. The company owns a lot near the present facility on which a new building can be constructed. The land was purchased 10 years ago for $50,500 and now has a market value of $106,900. Assuming a tax ..
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