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In this problem you will construct a "global leverage" factor. Assume you believe that history will repeat itself, and "expected" will be similar to historical averages. "Leverage" is computed as D/Assets ratio.
1) Assume you are told that low leverage stocks provide higher historical returns than high leverage stocks. Explain how would you construct zero-capital portfolio with positive expected return based on that information.
2) How would you create zero-capital, zero market beta portfolio with positive expected return based on the same information? (We could call this factor GlobalLev).
3) Assume GlobalLev is an important factor for explaining returns of mutual funds. Does that mean that GlobalLev is systematically important for financial markets, and how one would test that?
Formulate the quoted and effective interest rates that Bugis Bank should set if it wants to match Raffles Bank, assuming a 5-years horizon period.
The four main parts of a financial plan include setup cost, cash-flow statement, record-keeping systems, and assets and liabilities statement.
How many U.S.-insured banks have failed in recent years? Where would you look on the Web for this information?
If the investment bankers retained $1.26 per share as fees, what were the net proceeds to eBay? What was the market capitalization of the new shares of eBay?
You buy a zero coupon bond at the beginning of the year that has a face value of $1,000, a YTM of 8 percent, and 5 years to maturity.
Suppose you are just starting out on your career and want to make a savings plan to assure you put enough away to retire in 30 years. You plan to invest $300 each month in a retirement account. If you expect to earn 10% on average on your retireme..
Are some types of power more likely to result in ethical behavior than others?
Foggy currently pays a dividend of $0.36 per share. What is the value of Foggy's stock to an investor who requires a 16% rate of return?
The regular evaluation of an organization's finances goes a long way toward establishing trust with stakeholders, such as tax payers, board members, clients, patrons, and funding agencies.
Estimate a projected four-year Balance Sheet.
Suppose a firm estimates its overall cost of capital for the coming year to be 10%. What might be reasonable costs of capital for average-risk
Describe any pitfalls the firms encountered and how the problems were resolved.
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