Stock X has a standard deviation of return of 10%. Stock Y has a standard deviation of return of 15%. The correlation coefficient between stocks is 0.5. If you invest 60% of the funds in stock X and 40% in stock Y, what is the standard deviation of a portfolio? Justify your answer.
17.9. Higgins Metal Company was established in 1980. Four years later the company went public. At that time, Henry Higgins, the original owner, decided to establish two classes of stock. The first represents Class A founders' stock and is entitled to 10 votes per share. The normally traded common stock, designated as Class B, i
Folic Acid, Inc. has $20 Million in earnings, pays $2750000 interest to bondholders, and $1800000 in dividends to preferred stockholders. a. What are the common stockholders' residual claims to earnings? b. What are the common stockholders' legal, enforceable claims to dividends?
In Problem 3-28, you helped the medical professionals analyze their decision using expected monetary value as the decision criterion. This group has also assessed their utility for money: U(-$45,000) = 0, U(-$40,000) = 0.1, U(-$5,000) = 0.7, U($0) = 0.9, U($95,000) = 0.99, and U($100,000) = 1. Use expected utility as the decisio
I have to answer the question below in 300 words. I have been reading the chapter and don't fully understand this question: What conclusions can you draw about Time Warner Inc. performance over the last five years in terms of liquidity, activity, leverage, profitability and market value ratios?
4) Consider the following "rate" tree, which gives the evolution of ½-year rates. The risk-neutral probabilities are 0.5. Time 0 Time ½ Time 1 6.910% 5.999% 5.535% 5.432% 4.716%
Reported $9,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depreciation. The firm had no amortization charges, it had issued $4,000 of bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 40%. 2006 data are expected to remain unchanged except for one item, depreciati
How important has cash generation been for your current company or a prior employer? How is cash generation different from the concept of profit and loss (P&L) in accounting? Provide an example of how a company manages cash flow. Analyze the response of at least one colleague by comparing cash generation techniques at your compa
Question 11 Steve purchased his home for $500,000. As a sole proprietor, he operates a certified public accounting practice in his home. For this business, he uses one room exclusively and regularly as a home office. In Year 1, $3,042 of depreciation expense on the home office was deducted on his income tax return. In Year
Please help with the following problem. You own stock in the Gentry Company, and you read in the financial press that a recent bond offering has raised the firm's debt/equity ratio from 35 percent to 55 percent. Discuss the effect of this change on the variability of the firm's net income stream, other factors being constant
You are a data analyst with TeckWorld, a multinational company dealing in hardware and software products. The VP of the company has asked you to obtain forecasts of next year's inflation rate from 30 economists. Based on their forecasts you have calculated a confidence interval of 1.8 percent to 4.5 percent. The VP wants to know
How ERISA affects employees who frequently change employers.
The gasoline service stations in Rochester, New York convinced the City Council to ban signs displaying gasoline prices. Why would they want to do this? What effect do you think this law had on gasoline prices? Why?
Risk and Return Tradeoff Memo a. Complete the Constructing and Managing a Portfolio simulation b. Describe the risk-return tradeoff and the relationship between investment strategy and investment performance. c. Based on your results from the simulation, prepare 1000 word memo to Rainier Ekstrom, Casa Bonita's Chie
I need help on how to approach this assignment. i have to write a memo after completing the simulation. Risk and Return Tradeoff Memo a. Complete the Constructing and Managing a Portfolio simulation b. Describe the risk-return tradeoff and the relationship between investment strategy and investment performance. c
My portfolio is invested equally in five stocks (that is, each stock in the portfolio has a weight of 0.20) and has a required return of 9.4%. The risk-free rate is 5% and the market risk premium is 4%. What is the portfolio beta? Assume the my portfolio is on the SML. Choose 1 of the following: A. 0.950 B. 1.400 C. 0.800
I have to analyze two securities, a stock and a bond: General Electric (GE) and the selected bond is Santa Rosa, California Wastewater Series A. For each security, I need to answer the following questions and support it with mathematical calculations. (at least 600 words). Investment Portfolio Project: Risk/Return analysis
A company receives an average of $11,000 in checks per day. The delay in clearing is typically four days. The current interest rate is .016 percent per day. a. What is the company's float? b. What is the most they should be wiling to pay today to eliminate its float entirely? c. What is the highest daily fee the company s
A job at S&S Air You recently graduated from college, and your job search led you to S&S Air. Because you felt the company's business was taking off, you accepted a job offer. The first day on the job, while you were finishing your employment paperwork, Chris Guthrie, who works in finance, stops by to inform you about the
Suppose an investor is unhappy with River Cruises decision to borrow $250,000. What modifications can she make to her own investment portfolio to offset the effects of the firm's additional borrowing?
1. What are the advantages and disadvantages of debt financing. 2. How does the use of debt financing affect the rate of return that shareholders require on their investment in the firm's shares. How does the cost of equity (i.e., the rate of return investors require on their investment in the firm's shares) change when the
1. I am considering going to graduate school in 3 years. Current estimated cost is $32,000 per year. Those costs are expected to grow each year at the rate of inflation (3.2% per year). I intend to enter a two-year program. My first year tuition bill is due at the end of three years (for the first year of school) and my second t
I have attached 12 questions with answers. I would like to know how to solve each problem step-by-step. Please put solutions in the simplest form. Thank you! (note: a work document is also attached with these problems). 1. Last national bank offers a CD paying 7% interest (compounded annually). If you invest $1,000 how m
Based on your readings,discussions, analyze and discuss the key points of this class and how you plan to incorporate these key points into your personal and professional life. 1. constructing an investment portfolio 2. Financial ratios/ risk factor (alpha or beta) 3. portofio Diversification 4. Risk and return trad
6. You have the following information on two securities in which you have invested: EXPECTED STANDARD PERCENT Security Return Deviation BETA INVESTED(w) Xerox 15% 4.5% 1.20 35% Kodak 12% 3.8% 0.98 65% A) Which stock is riskier in a portfolio context? Which stock is riskier if you are considering them as i
Suppose in six months' time the cost of a gallon of heating oil will either be $0.90 or $1.10. The current price is $1.00 per gallon. Questions: a) What are the risks faced by a reseller of heating oil that has a large inventory on hand? what are the risks faced by a large user of heating oil with a very small inventory?
General Electric : Relative performance analysis 1. the five-year average return. 2. Determine the average five-year average return in your industry 3. Identify three additional stocks in each industry and determine their five year average return. 4. Compare your selected security performance to those in the
45. You are considering investing in a project with the following possible outcomes: Probability of Investment States Occurrence Returns State 1: Economic boom 15% 16% State 2: Economic growth
The Jon's Shoe Company, whose common stock is currently selling for $40 per share, is expected to pay a $2.00 dividend in the coming year. If investors believe that the expected rate of return on XYZ is 14%, what growth rate in dividends must be expected? a. 5% b. 14% c. 9% d. 6%
If there is a 20% chance we will get a 16% return, a 30% chance of getting a 14% return, a 40% chance of getting a 12% return, and a 10% chance of getting an 8% return, what is the expected rate of return and the standard deviation?