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You are considering an investment in a mutual fund with a 5% front-end load and an expense ratio of 1.35%. You can invest instead in a bank CD paying 7% interest.
a. If you plan to invest for six years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? Assume annual compounding of returns. (Do not round intermediate calculations. Enter your answer as a percentage rounded to two decimal places.)
b. Now suppose that instead of a front-end load the fund assesses a 12b-1 fee of 1.60% per year. If you plan to invest for two years, what annual rate of return must the fund portfolio earn for you to be better off in the fund than in the CD? (Do not round intermediate calculations. Enter your answer as a percentage rounded to two decimal places.)
Calculate the market capitalisation of Blackmores. Do you think Blackmores' stock is under- priced or over-priced? Answer this question with reference to capital asset pricing model (CAPM), and justify your answer
Holvey Company makes three products in a single facility. Data concerning these products follow: The mixing machines are potentially the constraint in the production facility. A total of 6,300 minutes are available per month on these machines.
1. A) What are the two situations where IRR cannot provide reliable decisions on capital investments?
Evaluate each company's Price to Book Value multiple in the context of their own ROE. Evaluate the Price to Book Value multiples of each company relative.
Irene Adler is planning investing in the common stock of Holmes and Watson. The following information are available for the two securities.
A stock has an annual return of 13 percent and a standard deviation of 58 percent. What is the smallest expected loss over the next year with a probability of 1 percent? Does this number make sense?
Hurd Corporation acquired a building valued at $160,000 for property tax purposes in exchange for 10,000 shares of its $5 par common stock. The stock is widely traded and selling for $15 each share.
If you bought this option for $510.25 and Delva's stock price actually dropped to $60, what would your pre-tax net profit be?
Explain why mutual funds are attractive to small investors? How can mutual funds generate returns to their shareholders?
Construct a lattice to determine the value of a European call option for a stock that has a current spot market price of $55, an upward (or downward).
Financial Slacks. For what kinds of companies is financial slack most valuable? Are there situations in which financial slack should be reduces by borrowing and paying out the proceeds to the stockholders? Explain.
you want to have 85000 in your savings account 13 years from now and youre prepared to make equal annual deposits into
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