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1. Mr K manages an RM35 million mutual fund that has a beta of 1.2 and an 11.50% required return. The risk-free rate is 4.20%. He now receive another RM17.5 million, which he will invest in stocks with an average beta of 0.72. What is the required rate of return on the new portfolio?
2. Currently, the risk-free rate is 4.25%, and the market risk premium is 8.00%. A fund manager has a RM300 million portfolio with a beta of 1.20. The manager expects to receive an additional RM200 million which will be invested in additional stocks. After investing the additional funds, the manager wants the fund's required and expected return to be 15.00%. What must the average beta of the new stocks be to achieve the target required rate of return?
3. George just borrowed $100,000 at an annual interest rate of 8% and he will repay it in five equal installments at the end of each of the next five years. How much would he still owe at the end of the first year, after the first payment has been made?
4. You plan to buy a car and need to borrow $50,000 from the bank. Interest rate offered by the bank is 4% nominal rate and the term loan is 7 years. Your installment will be monthly installment. How much total interest do you need to pay in Year 1?
Consider the following simplified financial statements for the Equity Inc.: What is the dividend they predict to pay out?
You have just won lottery of 11,000,000.your winnings will be paid to you in 26 equal installments with the first payment made immediately . if you had the money now you could invest it in an account with a quoted annual interest rate of 9% with mont..
Suppose you sell a fixed asset for $93,000 when it's book value is $116,000. If your company's marginal tax rate is 28%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?
The common stock of ABC Homes has an expected return of 13.6% and a beta of 0.7. The expected return on the market portfolio is 16%. What is the risk-free rate?
Your firm currently has $108 million in debt outstanding with a 6% interest rate. The present value of the interest tax shields is
Your goal is to create a portfolio that has an expected return of 13.1 percent. How much money will you invest in Stock Y? What is the beta of your portfolio?
Company has $5 million in cash from a recent sale of a business unit P? = $20 No= 2 million. What is the number of shares repurchased? What is the number of shares outstanding after repurchase?
Which one of these combines scenario analysis with sensitivity analysis?
Dealers trade from their own inventory. Brokers earns a profit on the bid-ask spread.
Discuss the advantages and disadvantages of operating and financial leverage, respectively. How does the concept of the optimal capital structure link, if at all, to operating and financial leverage?
Robotic Atlanta Inc. just paid a dividend of $4.00 per share (that is, D0 = 4.00). The dividends of Robotic Atlanta are expected to grow at a rate of 20 percent next year (that is, g1 = .20) and at a rate of 10 percent the following year (that is, g2..
Evaluate the profitability of Jackson relative to that of the average firm in its industry. Perform a DuPont analysis for Jackson. What areas appear to have the greatest need for improvement?
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