Reference no: EM132694352
1) Preston, Inc.'s stock has a 25% chance of producing a 48% return, a 50% chance of producing an 11% return, and a 25% chance of producing a -24% return. What is the firm's standard deviation of return? Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345%, then enter as 12.35 in the answer box
2) Ritter Company's stock has a beta of 1.95, the risk-free rate is 3.75%, and the required return on the market portfolio is 11.50%. Using CAPM, what is Ritter's required rate of return? Note: Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.
3) Jim Angel holds a portfolio consisting of the following five stocks: $190,000 invested in Stock A with beta of 1.55, $85,000 invested in Stock B with beta of 1.70, $95,000 invested in Stock C with beta of 2.95, $75,000 invested in Stock D with beta of 1.95, and $150,000 invested in Stock E with a beta of 0.35. What is the portfolio's beta? Note: Enter your answer rounded to two decimal places. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
4) Assume that you are considering the purchase of a 10 year bond with an annual coupon rate of 7.50%. The bond has a face value of $1,000 and makes semiannual interest payments. If you require a 6.75% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for this bond? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $1,234.567 then enter as 1234.57 in the answer box.
5) Keenan Industries has a bond outstanding with 15 years to maturity, an 8.25% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 4 years at a price of $1,085. What is the bond's nominal yield to call? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.