Reference no: EM131087674
1. The markets in general are paying a 3% real rate of return. Inflation is expected to be 2%. ABC stock commands a 6% risk premium. What is the risk-free rate of return?
2. The required rate of return on the Daisy Corporation's common stock is 11%, the current real rate of return in the market is 2%, and the market's risk-free rate of return is 4%. In this case, What is the risk premium associated with Daisy's stock?
3. Six years age, Leo invested $2,000. Today his investment is worth $3,200. The yield on this investment is?
4. Izzie bought a stock for $30 a share two years age. The stock does not pay any dividends. Today Izzie sold the stock for $32 a share. What is the internal rate of return on this investment? What is dollar return? What is the total holding period return in percentage term?
5. An investment produced annual rates of return of 5%, 12%, 8% and 11% respectively over the past four years. What is the standard deviation of these returns?
6. What is the expected return on a stock with a beta of 1.09, a market risk premium of 8%, and a risk-free rate of 4%?
7. The risk-free rate of return is 4%, while the market rate of return is 11%. Delta Company has a historical beta of 1.25. Today, the beta for Delta Company was adjusted to reflect internal changes in the structure of the company. The new beta is 1.38. What is the amount of the change in the expected rate of return for Delta Company based on this revision to beta?
8. Dr. Zweibel's portfolio consists of four stocks: AZMN, 35%, beta 2.4; MKR, 20%, beta 1.6; ABDE, 2.5%, beta 1.8; and SBUK, 20%, beta 2.1. Compute Dr. Z's portfolio beta. Does he seem to be a conservative or aggressive investor?
9. Assume that an investor generates the following income stream and can be purchased at the beginning of 2009 for $1000 and sold at the end of 2015 for $1200. Estimate the yield for this investment. If a minimum return of 9% is required, would you recommend this investment? Explain.
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Calculate the average daily balance and finance charge
: Calculate the average daily balance and finance charge. (Round your answers to the nearest cent.) 30-day billing cycle 9/16 Billing date Previous balance $ 2,000 9/19 Payment $ 60 cr. 9/30 Charge: Home Depot 1,500 10/3 Payment 60 cr. 10/7 Cash advanc..
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Shares of common stock outstanding
: XYZ corp. currently has 50 million shares of common stock outstanding. Their current market price is $80 per share and have a beta of 1.15. XYZ has $1 billion of bonds outstanding, each with the market value of $1100. The expected return on the S&P 5..
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An out-of-the-money call option is one that
: An out-of-the-money call option is one that:
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What is the initial net cash flow of the machine
: Mars, Inc. is considering the purchase of a new machine, which will reduce manufacturing costs by $5,000 annually. Mars will use the MACRS (5-year class) method to depreciate the machine, and it expects to sell the machine at the end of its 5-year li..
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What is the risk-free rate of return and standard deviation
: The markets in general are paying a 3% real rate of return. Inflation is expected to be 2%. ABC stock commands a 6% risk premium. What is the risk-free rate of return? An investment produced annual rates of return of 5%, 12%, 8% and 11% respectively ..
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What is the price of put option with same exercise price
: A call option is currently selling for $4.30. It has a strike price of $35 and five months to maturity. The current stock price is $37, and the risk-free rate is 3.8 percent. The stock will pay a dividend of $1.65 in two months. What is the price of ..
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Child care payments and any allowable child care credit
: Susan Beale is a single mother with two children, ages three and six. She pays a total of $7,000 each year to a neighbor to care for her children while she works. how should she report the child care payments and any allowable child care credit?
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Sell specified asset at agreed-upon price
: A financial contract that gives its owner the right, but not the obligation, to buy or sell a specified asset at an agreed-upon price on or before a given future date is called a(n) _____ contract.
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Variance of the portfolio-expected return of the portfolio
: Consider the following information: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .18 .353 .453 .333 Good .42 .123 .103 .173 Poor .32 .013 .023 −.053 Bust .08 −.113 −.253 −.093. What is t..
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