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Abigail has a $900,000 fully diversified portfolio. She subsequently inherits ABC company common stock worth $100,000. Her financial advisor provided her with the following estimates: original portfolio with E(r) 0.67% and SD 2.37%. ABC company with E(r) 1.25% and SD 2.95%. The correlation coefficient between them is 0.40. 1. The inheritance changes her overall portfolio. If she sells the ABC stock, she will invest the proceeds in risk free government securities yielding 0.42%. Assume she does this, what is the expected return of her new porfolio which includes the government securities. Covariance of the government security returns with the original portfolio returns. Standard deviation of her new portfolio which includes the government securities. Based on the conversations with her husband, she is considering selling the $100,000 of ABC stock and acquiring of XYZ company common stock instead. XYZ stock has the same expected return and SD as the ABC stock. Her husband comments, "it doesn't matter whether you keep all of ABC stock or replace it with $100,000 of XYZ stock". Is her husband's comment correct or incorrect?
In year 2, Price per unit increases to $13.50, and unit of sales increases by 4%, all other assumptions remain the same.
Computation of the present value of the contract and what was the present value of this contract in January when Schneider signed it
Calculating multiple cash flows for a year and the amount of the annuity shown below is the amount of each individual cash flow
Calculate how much money she could take out each year and
Access the latest Form 10-K for the company and read "Management's Discussion and Analysis" from Form 10-K. Describe four significant business risks of the company as described in "Management's Discussion and Analysis."
The Botolph Corporation produces botolphinators
Assume in six months' time the cost of a gallon of heating oil will either be $0.90 or $1.10. The current price is $1.00 each gallon.
Assume that you want to purchase a new truck from a local dealership. The dealership is offering 2 percent financing for 4 years. They are also offering a $3,000 cash rebate for an externally financed deal.
What is the tax equivalent yield of a 10 year general obligation bond issued by the City of Burlington with a coupon of 4.5% if the assumed marginal tax rate is 40%?
Net income = $825; after-tax operating income [EBIT (1-T)] = $925; EBITDA=1,700; Gross fixed assets = $2,500; and Net operating working capital (NOWC) = 350. Tax rate is 40%. How much free cash flow did the firm generate during 2009?
Dome Metals has credit sales of $468,000 yearly with credit terms of net 60 days, which is also the average collection period. Dome does not offer a discount for early payment, so its customers take the full 60 days to pay.
Calculate the stock's value if it paid a $4 dividend last year, expects dividends to grow by 21 percent in years 1 & 2 and 10 percent dividend growth in year 3.
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