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The market portfolio has an expected return of 12.5 percent and a standard deviation of 22.5 percent. The risk-free rate is 5.5 percent.
a. What is the expected return on a well-diversified portfolio with a standard deviation of 9.5 percent? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
Expected return %
b. What is the standard deviation of a well-diversified portfolio with an expected return of 20.5 percent? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
Standard deviation %
An Asset currently trades at price S0. Let V0 be the current price (call premium plus put premium) of an at-the-money straddle on A expiring in one month. You have an initial capital amount of C0 and execute the following strategy. - keep C in cash w..
Over the past year (from 1 year ago to today), the inflation rate was 5.85 percent, the risk-free rate was 7.47 percent, and the real rate of return for a bond was 9.94 percent. The bond was priced at 1,198.72 dollars one year ago, pays annual coupon..
Using the expectations hypothesis theory for the term structure of interest rates, determine the expected return for securities with maturities of two, three, four years on the following data.
Plush Pilots, Inc. has balance sheet equity of $5.2 million. At the same time, the income statement shows net income of $743,600. The company paid dividends of $423,852 and has 130,000 shares of stock outstanding. If the benchmark PE ratio is 21, wha..
KADS, Inc., has spent $300,000 on research to develop a new computer game. The firm is planning to spend $100,000 on a machine to produce the new game. The firm has a tax rate of 39 percent, an opportunity cost of capital of 13 percent, and it expect..
A company agrees to repay a loan over five years. Interest payments are made annually and a sinking fund is built up with five equal annual payments made at the end of the year. Interest on the sinking fund is compounded annually.
The growth rate for the firm's common stock is 7%. The firm's preferred stock is paying an annual dividend of $5. What is the preferred stock price if the required rate of return is 8%?
The company employs a number of strategies to manage these risks, including the use of derivative financial instruments. Derivatives involve the risk of non-performance by the counterparty.
Justin Cement Company has had the following pattern of earnings per share over the last five years: . Project earnings and dividends for the next year (2011). If the required rate of return (Ke) is 13 percent, what is the anticipated stock price (P0..
Blackstone, Inc. is considering expanding operations. The company owns a lot near the present facility on which a new building can be constructed. The land was purchased 10 years ago for $50,500 and now has a market value of $106,900. Assuming a tax ..
A Treasury security carries a fixed 3 percent annual coupon rate and matures in exactly two years. The Treasury is currently priced at $ 10,000 par value to yield 3 percent to maturity. Assume that you can buy the bond and strip the coupons and final..
Which one of these statements is correct regarding ratio analysis as a predictor of bankruptcy?
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