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The risk-free rate is 0%. The market portfolio has an expected return of 20% and a volatility of 20%. You have $100 to invest. You decide to build a portfolio x which invests in both the risk-free investment and the market portfolio.
a. How much should you invest in the market portfolio and the risk-free investment if you want portfolio x to have an expected return of 40%?
b. How much should you invest in the market portfolio and the risk-free investment if you want portfolio x to have a volatility of 10%? Instead of investing in the market portfolio, you decide to invest in individual stocks. After some research, you decide to invest all your $100 in D's stock because you really like its CEO. D has a volatility of 40%. D's return has a correlation of 0.8 with the market portfolio.
c. What is AMD's beta with the market?
d. What is AMD's expected return?
Reliable Cars has sales of $3,770, total assets of $3,150, and a profit margin of 5 percent. The firm has a total debt ratio of 42 percent. What is the return on equity?
What is the conceptual difference between the percentage of credit sales and aging methods of estimating bad debts?
United Industries is about to pay a dividend of 1.35 each share. It's a mature corporation but future EPS and dividends are expected to grow with inflation, which is forecasted at 2.75% per year.
Assume you work for an oil company that deals with oil contracts and you are responsible for constructing those oil contracts. Assume you have an oil contract that has the following characteristics: Zero initial cost and the buyer pays S - F each ..
Calculate a value of the competitor and hence a recommended purchase price.
Suppose you own stock in the Gentry corporation, and you read in the financial press that a recent bond offering has raised the firm's debt/equity ratio from 35% to 55%.
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Orlando Pixie Dust is considering an option to buy some land in Brazil 9 years into the future. The acquisitions department discounts future projects at 2%. Calculate the discount factor that will be applied to the future cash flow.
Devon Automotive estimates that it takes the company about 62 days to collect cash from customers on finished goods from the day it receives raw materials, and it takes about 67 days to pay its suppliers. What is the company's cash conversion cycl..
Roy's Welding Supplies common stock sells for $38 a share and pays an annual dividend that increases by 3 percent annually. The market rate of return on this stock is 8.20 percent. What is the amount of the last dividend paid?
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What are the consequences of using flawed evidence in decision making and strategic planning process?
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