What are the standard deviations of the returns for stocks
A and B? Suppose you want to use this history as a guide to making an investment decision
for the long run. Based on this history, and assuming that standard deviation of return
is the appropriate measure of risk, does it make any difference whether you invest
wholly in stock A, wholly in stock B, or half in stock Aand half in stock B? Assume that
average return is to be maximized and risk is to be minimized, if that is jointly possible.

See the problem attached.
a. What is the average under pricing of this sample of IPOs?
b. What is the average initial return on my "portfolio" of shares purchased from the four IPOs I bid on?
Calculate the average initial return weighting by the amount of money invested in each issue.
c. Why have I perform

You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 10 percent, -11 percent, 18 percent, 19 percent, and 10 percent. Suppose the average inflation rate over this period was 2.2 percent and the average T-bill rate over the period was 4.7 percent.
a.
What was the average real retur

Taylor Inc. estimates that its average-risk projects have a WACC of 10%, its below-averagerisk projects have a WACC of 8%, and its above-averagerisk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept?
a. Project C, which is of above-averageriskand has a return of 11%.
b.

Two stock abc and xyz have expected returns of 30% and 40% with standard deviation of 15% and 20% respectively. What will be averagereturnandrisk if 40% of ones. Funds are invested in ABC and 60% are invested in XYZ

Explain the following. A company estimates that an average-risk project has a cost of capital of 8 percent, a below-averagerisk project has a cost of capital of 6 percent, and an above-averagerisk project has a cost of capital of 10 percent. Which of the following independent projects should the company accept? Project A has b

Wagner Inc. estimates that its average-risk projects have a WACC of 10%, its below-averagerisk projects have a WACC OF 8%, and its above-averagerisk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept? Project A is of averageriskand has a return of 9%, Project B is of below-

Wagner Inc estimates that its average-risk projects have a WACC of 10%, its below-averagerisk projects have a WACC of 8%, and its above-averagerisk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept?
a) Project A is of averageriskand has a return of 9%.

Here are the inflation rates and U.S. stock market and Treasury bill returns between 1929 and 1933: 1929 Inflation=-2, Stock Market Return=-14.5, T-Bill Return=4.8. 1930: Inflation=-6.0, Stock Market Return=-28.3, T-Bill Return=2.4. 1931: -9.5, -43.9 and 1.1. 1932: -10.3, -9.9 and 1.0. 1933: .5, 57.3 and .3.
A. What was

Consider the following annual returns of Estee Lauder and Lowe's Companies:
Compute each stock's averagereturn, standard deviation, and coefficient of variation.
Estee Lowe's
Year Lauder Companies
2006 20.4% -6.0%
2005 -26.0% 16.1%
2004 17.6% 14.2%
2003 49.9% 48.0%
2002 -16.8% -19

1. Company X has a beta of .85, the risk-free rate of return is 1%, and the averagereturn on the market is 9%. (1) Calculate the required rate of return on Company X's stock. Show how you derive the answer. (2) Does Company X's stock have greater risk, the same risk, or less risk than the average stock? Explain.
2.The 1-yea