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Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 2.8% + 1.00RM + eA RB = –1.0% + 1.30RM + eB σM = 18%; R-squareA = 0.27; R-squareB = 0.13 Assume you create a portfolio Q, with investment proportions of 0.40 in a risky portfolio P, 0.35 in the market index, and 0.25 in T-bill. Portfolio P is composed of 70% Stock A and 30% Stock B.
What is the beta of portfolio Q? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
What is the "firm-specific" risk of portfolio Q?(Calculate using numbers in decimal form, not percentages. Do not round intermediate calculations. Round your answer to 4 decimal places.)
You have found a bond with 4 years and 8 months remaining to maturity. It has a par value of $1,000. It has a coupon rate of 8%. The yield to maturity on the bond is 10%. What is the value of the bond to you today?
Explain why the present value of the future expected cash flows is used as the value of a financial asset.
You see a fast growing company that is estimated to have dividend growth of 24%, 20%, and 16% over each of the next three years (24% in year 1 in year 2 20% and in year 3 16%) The company paid a dividend of $2.28 per share over the past twelve months..
Based on this information calculate the IRR for the project ___What's the present value of the $1,100 due in 20 years (FV=$1,000)? We assume current interest rate is 8%, compounded annually.
What's the difference between Standard Deviation and Beta? When talking about cost of capital, it is said that required return is the same than cost of capital. How's that (one is return and the other one is cost)? Why are taxes are applied to cost o..
Justin just made a margin purchase of 100 shares of DEF Corp. for $22.50 per share. The initial margin is 70%. The maintenance margin is 30%. How low can the price of each share of DEF be before Justin will have to add equity to his account?
The securities act of 1933 is primarily concerned with.
1 when you purchase a stock you expect to receive dividends plus capital gains. not all stocks pay dividends
Your firm is considering leasing a radiographic x-ray machine. The lease lasts for three years. The lease calls for four payments of $25,000 per year with the first payment occurring immediately. The computer would cost $140,000 to buy and would be s..
Assume that you are presently 30 years old and that you intend to retire when you turn 65. You would like to make sure that you have enough funds at the point of retirement to last until you are 95. How much should you be setting aside yearly between..
A project under consideration has an internal rate of return of 14% and a beta of 0.7. The risk-free rate is 4%, and the expected rate of return on the market portfolio is 14%. Calculate the required return. Calculate the required return if its beta ..
Calculate the NPV if you sell the old machine and buy new machine A. (Round up to the nearest dollar amount. DO NOT use $, commas, or decimal points) (Example $23,345.50 is entered as 23346)
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