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A big pharmaceutical? company, DRIg, has just announced a potential cure for cancer. The stock price increased from $4 to $94 in one day. A friend calls to tell you that he owns DRIg. You proudly reply that you? do, too. Since you have been friends for some? time, you know that he holds the? market, as do? you, and so you both are invested in this stock. Both of you care only about expected return and volatility. The? risk-free rate is 4%?, quoted as an APR based on a? 365-day year. DRIg made up 1.91% of the market portfolio before the news announcement.
a. On the announcement your overall wealth went up by 1.5% (assume all other price changes cancelled out so that without? DRIg, the market return would have been?zero). How is your wealth? invested? ?(Round all intermediate values to five decimal places as? needed.)
The percentage of your wealth invested in the market is ____% ? (Round to two decimal? places.)
b. Your? friend's wealth went up by 2.1%. How is his wealth? invested?
The percentage of his wealth invested in the market is _____% ? (Round to two decimal? places.)
The company is considering an expansion to double the production of its current product. The company can issue equity or it can issue debt yielding 7% to pay for the expansion.
Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money
The owner of the supplier firm has indicated that he would be willing to sell his business for $500,000. I expected this "vertical integration" of the company to result in reduced material costs totaling $75,000 annually
a stock's expected dividend payment at the end of the year (d1) is $1. the required rate of return is r(s)= 11%, and the growth rate of the dividend is constant at 5%. what is the current stock price
You purchased 1,000 shares of the New Fund at an NAV of $27 per share at the beginning of the year. You paid a front-end load of 2%. The securities in which the fund invests increase in value by 11% during the year.
Find the following values using the equations and then a financial calculator. Compounding/discounting occurs annually. Round your answers to the nearest cent.
It is impossible to put three pigeons in two pigeon holes with at most one pigeon per hole.- Prove this by the resolution algorithm.
How does emotional finance shed light on the appeal of hedge funds to investors, and explain Bernie Madoff in particular?
Suppose the real risk-free rate, r*, is 2% and investors expect inflation to be 4% next year, 5% the following year, and 7% per year thereafter. Assume the MRP is zero for Year 1 and increases by 0.1% each year.
A bond that has a 1000.00 par value and a contract or coupon interest rate of 11.5%. The bonds have a current market value of 1,124.00 and will mature in 10 years. The firm's marginal tax rate is 34%.
Both Bond Bill and Bond Ted have 10 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 3 years to maturity, whereas Bond Ted has 20 years to maturity.
CFE5305: FINANCIAL TIME SERIES ANALYSIS - Calculate the continuously compounded annual return for the Petrobras stock for 2009. Calculate the simple annual return for 2009 and explain the Jarque-Bera (J-B) test. Using this test, what conclusion can ..
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