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1. You own a portfolio comprised entirely of 100 shares of Stock A and 500 shares of Stock B. The current market prices for Stock A and Stock B are $20 and $7, respectively. Stock A’s expected return is 14%, and Stock B’s expected return is 9%. What is the expected return on the portfolio?
a. 0.1006
b. 0.1050
c. 0.1082
d. 0.1113
e. 0.1141
2. Phil's Carvings, Inc. wants to have a weighted average cost of capital of 9.5 percent. The firm has an aftertax cost of debt of 6.5 percent and a cost of equity of 12.75 percent. What debt-equity ratio is needed for the firm to achieve their targeted weighted average cost of capital?
a. .67
b. .84
c. .92
d. .76
e. 1.08
Parents deposit $7,000 into a savings account at the end of each year for 22 years to help their child pay for college. The savings account pays 7% interest per year, compounded monthly. The child withdrawals an equal sum twice per year while in coll..
Introduce and explain the Capital Asset Pricing Model. What is it intended to calculate, and why is it useful in finance?"
A corporation issued a 20 year, 5% coupon bond 8 years ago. Over those 8 years, interest rates generally have fallen, and the corporation's bond rating has increased from BBB to AAA. As a result, the YTM has fallen. Based on these developments...
During the year a company increased the production capacity by acquiring more machines. Compute company's capital expenditures during the year.
Dalia’s Biomedical Supplies has a stock with a beta of 0.85 and an expected return of 10%. Assume that short-term US treasury bills are currently earning 3% and the market risk premium is 5%. Assuming an equal investment in the two assets, what is ex..
Which of the following situations would likely lead to an increase in the value of the U.S. dollar? OPEC votes to change crude oil price denomination from USD to the euro. The U.S. is spending billions of dollars to lead the international campaign ag..
Gay Manufacturing is expected to pay a dividend of $1.25 per share at the end of the year (D1 = $1.25). The stock sells for $32.50 per share, and its required rate of return is 10.5%. The dividend is expected to grow at some constant rate, g, forever..
On January 15, 2013, A common stock sells for $82 per share, has a growth rate of 7% and a dividend that was just paid of $3.82 in December 2012. What is the annual percent yield per share?
L.J.’s Toys Inc. just purchased a $365,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its five-year economic life. Each toy sells for $25. The variable cost per toy is $11, and the firm incurs ..
A firm is considering an investment in a new machine with a price of $18 million to replace its existing machine. The current machine has a book value of $6 million and a market value of $4.5 million. What is the NPV if they purchase the new machine?..
What is an offshore center?
What are the monthly payments for a 30 year transitional mortgage? What are the payments for a 20 year traditional mortgage?
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