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-Suppose the market risk premium is 5.6% and also that the standard deviation of returns on the market portfolio is 0.21. Further assume that the correlation between the returns on ABC (Google) stock and returns on the market portfolio is 0.8, while the standard deviation of returns on ABC stock is 0.62. Finally assume that the risk-free rate is 2%. Under the CAPM, what is the expected (i.e. required) return on ABC stock? Answer should include four digits to the right of the decimal point.
-You are planning to buy two stocks to create a portfolio. One is the very-stable old-world company Proctor & Gamble (PG). Assume PG's beta equals 0.37. The other stock is high-flying new-world company Tesla (TSLA). Assume TSLA's beta equals 1.49. You will invest an equal amount of money in each stock. What is the beta of your planned portfolio? Answer should include two digits to the right of the decimal point, rounded appropriately.
-You are considering a new project. The initial cost is $165 million. You expect free cash flow (FCFF) of $5million the 1st year, and that this free cash flow will grow by 11.8% over the following 10 years (i.e., g=11.8% for t=2 through t=11). After that, free cash flow is expected to grow at a constant rate of 4.7% forever. Assume a WACC equal to 10%. What is the project's NPV "in millions of dollars"? Answer should include four digits to the right of the decimal point.
the standard deviation of stock returns for stock a is 40. the standard deviation of the market return is 20. it the
Explain the changes in M1 and M2, if an individual moves money from a small denomination time deposit to a demand deposit account?
Risk at Freddie Mac (Stanford Business School Case F270, European Case Clearing House Case). The case considers the interest rate risk management of Freddie Mac
Explain the risks of the interest rate swap position and how could it be could be hedged - calculate a one year EiS forward rate and explain how it could be used the hedge the currency risk.
You are considering investing in one of two well-diversified portfolios. Portfolio A has an expected return of 8% and a beta of 0.85 while Portfolio B has an expected return of 12% and a beta of 1.95. Assuming that you are a rational risk-averse i..
ABC mines copper with fixed costs of $0.50/lb and variable cost of $0.40/lb. What is its estimated 1-year profit from now
(Forecasting inventories) Scion Company wants to plan inventories for the year 2017 based on average of the past 5 years data. Scion's CEO, Radha Kar, believes.
Suppose you have been presented with an opportunity to play a coin flipping game with the following payoffs: heads, you get $10, but tails
You hold a portfolio consisting of a $5,000 investment in each of 20 different stocks. The portfolio beta is equal to 1.12. You have decided to sell a coal mini
Describe the effect of a mutation in the gene that encodes for the C3 protein of the complement pathway
The standard deviation of returns for Merck and Home Depot are 16% and 24%, respectively. The correlation between these two stocks is 0.19.
Determine the organization's capacity to provide a healthy, safe, person-centered environment for staff and patients based on it culture and climate
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