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Assume that an analysist at a major brokerage firm have been following the three stocks in the preceding
Stock
Current price
Expect price
Expected dividend
Beta
A
25
30
1.0
0.70
B
40
45
0.50
C
33
34
1.15
The average market rate for next 1 year is estimated to be 10-% a year while expected rate of return for frisk-free asset (T-bill) is about 3%.
a) Find the estimated return for asset A, B and C using the information provided in the Table above.
b) Using the CAPM model, find the required rate return for each stock.
c) Draw the SML line and plot stock return positions.
d) Identify whether securities are under- over or fairly priced.
What is your exposure (in U.S. Dollars) of the 4 hedging strategies if, in 90 days, the exchange rate is $1.70 = £1? Show how you calculated your exposures.
If the indian government unexpectedly announces taht it will be imposing higher tariffs on foreign goods one year from now, what will happen to the value of the indian rupee today?
The table below shows the demand and supply of coats in Small Town.
You borrow $100,000 to buy a house; if the annual interest rate is 6% and the term of the loan is 20 years, what is the annual payment required
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The bonds may be called in 5 years for 116.0% of par. What is the quoted annual yield-to-maturity for the bonds
what are the negative consequences of a company holding too much
Fely started a food business and she needs to know how much her plates cost to make to know how much her profit is. She has 3 sizes or seafood trays:
Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $6.3 million.
Assume that all earnings are paid as dividends and that both firms require a 19 percent rate of return.
The sample mean is $915 and the sample standard deviation is $227.50 based on alpha=0.10
Draft your Financial Plan and Financial Statements for 3 years including: Revenue forecasts, Loans and investments, Profit and Loss statement.
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