Company A has a Beta of 0.5. The risk free rate is 4%, the expected return on the market is 12%. What is the expected percentage return for Company A? 4% 6% 8% O 12%
Q: An insurance policy sells for $1200. Based on past data, an average of 1 in 125 policyholders will…
A: Profit is the income earned after all the deductions of expenses from the total revenues of the…
Q: PATTS is deciding which of the two investments to take. Option A, total costs = $75,000,000 and the…
A: let's solve this with the helo of the Benefit-Cost ratio. Assumption Here we assume that bother the…
Q: An oil company is considering drilling in the Gulf at a current cost of $400,000 with an expected…
A: Given information, Current cost to the firm: $400,000 Expected profit in 3 years: $500,000 Interest…
Q: Under what conditions might a manager interested in the maximization of shareholders’ wealth…
A: Meaning of NPV: The term net present value measures the growth level for companies i.e. the…
Q: Q13. What is the safety stock of the following case? Weekly demand of 24500 units, with standard…
A: Safety stock is an extra quantity of a product which is stored in the warehouse to prevent an…
Q: Problem 4. The current Japanese yen/US dollar spot rate is ¥80 per dollar (that is, E¥/S= 80), and…
A: Total Gain Amount refers to the total dollar amount of the Company's realized capital gains on a…
Q: The product sells for $20, and each unit has a constant marginal cost of $16. Assume that the…
A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: If a trader sells an option at an implied volatility of 10%, and plans to delta hedge it, over the…
A: Delta's hedging options trading strategy restricts or mitigates the directional risk of underlying…
Q: I am in possession of two coins. One is fair so that it lands heads (H) and tails (T) with equal…
A: Hi, since you have asked a question with multiple sub-parts we will answer only first three parts…
Q: firm has a portfolio composed of stock A and B with normally distributed returns. Stock A has an…
A: Incremental VaR is determined by thinking about the portfolio's standard deviation and pace of…
Q: The expected return on Stock X is 9.5%, the standard deviation of expected returns is 30%, and the…
A: There are two sorts of stocks: ordinary and preferred. The distinction is that whereas the owner of…
Q: If a project costs $90,000 and is expected to return $24,500 annually, how long does it take to…
A: The time it takes to recoup the value of associate degree investment is noted because the payback…
Q: According to Sam, Stock S is better because it provides an annual dividend of P5. According to John,…
A: When talking about an investment market, it can be seen that people make their economic and…
Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…
A: Given Expected return Standard Deviation Stock Funds 23 29 Bond Funds 14 17
Q: Suppose that a new machine tool having a useful life of only one year costs $80,000. Suppose, also,…
A: Given, The cost of purchasing the machine : $80,000 Increase in revenue due to the machine :…
Q: Given the following information what is the appropriate amount of safety stock and when should the…
A: Since we are assuming normal distribution of demand during the lead time we need to stock more than…
Q: P(A) = 0.2 P(B)= 0.3 Find P(A and B) when events are mutually exclusive.
A: It has been given that, P(A) = 0.2 P(B)= 0.3 Events A and B are mutually exclusive.
Q: What is the price of a $35 strike call? Assume S = $38.50, σ = 0.25, r = 0.06, the stock pays no…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Two projects are independent if the expected costs and the expected benefits of each project do not…
A: Given there are two projects, expected costs of two projects are different and expected benefits of…
Q: Assume you can invest in 2 projects whose payoff depend on the state of the economy. The profits…
A: Probability of recession is 0.3 and no recession is 0.7.
Q: A manager has to decide whether to prepare a bid or not. It costs P5,000 to prepare the bid. If the…
A: According to the provided information, At the end of the success branch, P100000 is the return, but…
Q: A firm has a portfolio composed of stock A and B with normally distributed returns. Stock A has an…
A: Given data, Stock-A, Annual Expected return= 15% Annual volatility = 20% Position firm in stock A…
Q: You have just won the lottery. The state offers you an amortized payout of $200,000 at the end of…
A: A lump sum is defined as a single large sum of money. In contrast to a series of payments made over…
Q: Sarah Alqahtani was just notified by her lawyer that she has inherited 80,000 SAR from her uncle…
A: Here we calculate the expected return by using the given information , so the calculation of the…
Q: Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of…
A: The rate of return(RoR) refers to the net gain(G) or loss(L) from an investment(I) over a given…
Q: Let us assume that you have two possible mutually exclusive projects available and you need to…
A: We have been given two projects with the following possible pr Project A Ri pi 50 0.4 20 0.5…
Q: Suppose that you have a stock with a market beta of zero. This means that: a) the stock has no risk…
A: Ans in step 2
Q: The Polytechnic campus bookstore sells diploma frames stamped with Sparky. The frames must be…
A: Answer -
Q: Rezoning Approved Rezoning Not Approved Decision Alternative S1 S2 Purchase, d1 600 -200 Do not…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Polaris Industries wishes to purchase a multiple-use in-plant “road test’ simulator that can be used…
A: MARR refers to the minimum rate of return on a project that a project manager or company is willing…
Q: "A financial investor has $31,000 to invest. The choices have been narrowed down to the following…
A: The return on investing in foreign bond can be calculated as follows;
Q: You are presented 2 investment options. Which one gives you a better return? In option A, you pay…
A: Rate of return: Rate of Return (ROR) measures the profit or loss that an investor would get from an…
Q: wer choices When purchasing stocks, it is best to look at a variety of factors such as the…
A: When purchasing stocks, it is best to look at a variety of factors such as the overall financial…
Q: The following are estimates for two stocks. Firm-Specific Standard Deviation Stock A B Expected…
A: A standard deviation (symbol σ) is a proportion of how distributed the information/data is…
Q: Suppose that a new machine tool having a useful life of only one year costs $80,000. Suppose, also,…
A: Given Cost of the machine tool = $80,000 Net additional revenue = $96,000 Return from buying the…
Q: Risky Prospect Y is defined as: Y = ($7,0.25 ; $12,0.50; $25,0.25) What is the expected value of…
A: The expected value of a prospect is based on the return it generates corresponding to the…
Q: A company estimates that 0.7% of their products will fail after the original warranty period but…
A: The expected value is otherwise called the average estimation of the random variable. The mean…
Q: An investor wishes to invest P2,000,000. Venture A, requiring P2,000,000 will return 8%. Venture B,…
A: Given: An investor invest = P2,000,000 The return in Venture A is = 8% An investor B invest =…
Q: An automobile parts manufacturer is considering whether they should invest in an automatic or…
A:
Q: Consider the following cash flow diagram. The probability of the pessimistic value of N = 4 years is…
A: The value for pessimistic: PW = -100,000+25000(P/A, 8%,…
Q: Batelco Inc. is considering two mutually exclusive projects A and B. Each project requires an…
A: 1. Project -A Net Present Value ( N.P.V) for 6 years period PVAF ( 12% , 6 Yrs ) = 4.111% Now,…
Q: Which of the following statements is incorrect?(a) Holding on to cash is the most risk-free…
A: An investment with a certain rate of return and no chance of default. Although various investments…
Q: Which of the following statement(s) on return predictability are correct: 1. Present value…
A: At the market place, uncertainty and predictability are the special events that allows people to act…
Q: There are only two (equally-likely) states of nature in this economy: boom and bust, which are…
A: Equity beta is a measure of a stock’s systematic risk. It is estimated by comparing the sensitivity…
Q: Stock ABC has a Forward for December at: $450, Is it reasonable that A PUT option on ABC, with a…
A: A forward contract allows you to buy or sell an asset at a predetermined price in the future. An…
Q: A stock is currently at $20. It can go to $22 or $18 in 3 months. The risk free rate is 12% per…
A: To find the value of the option, there are different methods to calculate; binomial trees, the…
Step by step
Solved in 2 steps
- A stock currently sells for 13 TL per share and pays 0.18 TL per year in dividends. What is an investor's valuation of this stock if she expects it to be selling for 16 TL in onelyear and requires a 10 % return on equity investments? O a. 14,55% O b. 11.82% Oc 14,71% O d. 14,73%If a commercial bank offers a loan of $1,400 and the borrower will repay the loan with probability 0.84, then at the competitive interest rate, what is the required loan repayment amount? O $1,616 O $1,666 O $1,705 O $1,735Dhofar Energy Services has a Beta = 1.68 The risk-free rate on a treasury bill is currently 4.4% and the cost of equity has 20.70%. What is the market return? Select one: O a. All the given choices are not correct O b. 1,0970 Oc.0.2369 O d. 0.1654 O e. 0.1410
- A bond has a face value of $1000 and a coupon rate of 5.2%. What would the rate of return be if the bond was bought for $983.6 and sold one year later for $1008.5? Select one: O a. 8.61% O b. 8.24% O c. 7.82% O d. 7.21%The median annual growth in the stock index is 7%. Which of the following annual stock index growth rates indicates a particularly strong economy? O-3% 5% 8,5% O 12.9%Mrs Gomez has a portfolio with an expected return of 7%. The portfolio is evenly invested in a stock and a risk-free asset. The market has an expected return of 12% and the risk-free asset has an expected return of 4%. What is the beta of the stock? O a) 0.50 b) 0.75 Od 1.00 d) 1.25 e) 1.50
- What is the expected value with perfect information in the following decision table? Alternatives P Option 1 Option 2 Select one: O a. 300 O b. 260 O c. 200 O d. 50 350 e. States of Nature $1 .6 200 50 S2 4 300 350Suppose that a new machine tool having a usetul ife of onty one year costs $80.000 Suppose, atso, that the net additional revenue resulting thom buying this tool isexpected to be $12.000. The expected rote of return on this tool is Multiple Choice 40 percent 60 percent 30 percent 12 percentIt is given that both a one-year put option and call option on the same underlying stock have a strike price of Y and a one- year zero coupon bond with a face value of Y. To replicate the long put position payoff with the same underlying stock, an investor needs to Select one: O Short stock, short call and short bond O Short stock, long call and long bond O Long stock, long call and short bond O Long stock, long call and long bond O Long stock short call and long bond
- Assume you can invest in 2 projects whose payoff depend on the state of the economy. The profits from each project for each state of the economy are presented below. What are the expected payoffs of each project if there is a 50% chance of a recession and a 50% of no recession? Profit under recession Profit under normal conditions Project 1100,000 150,000 Project 2 50,000 240,000 O Project 1: $120,000 and Project 2: $150,000 Project 1: $125,000 and Project 2: $115,000 Project 1: $145,000 and Project 2: $145,000 O Project 1: $125,000 and Project 2: $145,000Question 20 A decision tree of a project is given as follows: A1 S8 What is the expected value of alternative B? 0.5 27 O a. $5.0 EMV-7.5 A2 O b. 55.2 0.5 O. S0 $15 O d. 54.5 .73 $4 0.45 $10 0,55 soYour friend is contemplating buying a local restaurant. He has assessed the lifetime profits, including resale, to be $11 million with 20% chance, $6 million with 60% chance or $3 million with 20% chance. Knowing the most your friend would pay for the restaurant is $6.4 million, what can you infer about the situation? O A. The expected payoff of the restaurant is $6.333 million, the risk-discount being offered by your friend is $77.000 and your friend is risk averse with respect to this purchase. O B. The expected payoff of the restaurant is $6.4 million, the risk-premium being required by your friend $0 and your friend is risk neutral with respect to this purchase. o C. The expected payoff of the restaurant is $6.4 million, the risk-premium being required by your friend $200,000 and your friend is risk seeking with respect to this purchase. O D. The expected payoff of the restaurant is $6.333 million, the risk-premium being required by your friend is $333,000 and your friend is risk…