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# covariance of return

A project has an expected cash flow of \$300 in year 3. The risk free interest rate is 5%. The market risk premium is 8%. The projects Beta is 1.25. Calculate the certaintly equivalent cash flow for year 3.

you invest equal amounts in a portfolio with an expected return of 16% and a standard deviation of returns of 20% and a risk free asset with an interest rate of 4%. Calculate the standard deviation of the returns on the resulting portfolio.

stock P and Q have annual returns of -10%, 12%, 28% and 8%, 13%, 24% respectively. Calculate the covariance of return between the securities.

A company has paid a dividend of \$2 per share out of earnings of \$4 per share. If the book value per share is \$25 and it is currently selling for \$40 per share, calculate the required rate of return on the stock.

If the present value of \$1 received n years from today at an interest rate r is 0.621, then what is the future value of \$1 invested today at an interest rate of r% for n years.

#### Solution Summary

Calculate the covariance of return between the securities in this posting.

\$2.19