Suppose that you are asked to forecast future stock prices for Tesla, so you proceed to collect all available information. The day you announce your forecast, Toyota announce a brand-new plan to merge and reshape the structure of the electric carts industry. Would your forecast still be considered optimal? Discuss.
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Suppose that you are asked to
collect all available information. The day you announce your forecast, Toyota announce a
brand-new plan to merge and reshape the structure of the electric carts industry. Would
your forecast still be considered optimal? Discuss.
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- Suppose that you decide to play a game. You buy stockby throwing a dice a few times, using that method toselect which stock to buy. After ten months you calculate the return on your investment and the return earned bysomeone who followed “expert” advice during the sameperiod. If both returns are similar, would this constitute evidence in favor of or against the efficient markethypothesis?Submit All Question 28 of 30 Suppose Jon decides to purchase either a long-term Treasury bond or a share of stock from a company in the Dow Jones Industrial Average. Assume that either one will behave similarly to the average security in their class, and ignore the effect of market conditions. Which security is more likely to lose most of its value in the next year after Jon purchases it? O the probabilities of major loss are the same they are both guaranteed to increase in value the stock the bond Based on historical returns, which security is likely to grow more significantly in value after Jon purchases it? the bond 8:27 PM a 46°F E 4) 12/15/202CorpCo is a large manufacturing firm with many stockholders. a. The firm paid a dividend of $6 during the past year and it estimates dividends to grow at 7% annually in the future. Firm’s stockholders require a rate of return of 14%. What would be the expected value of each share today? b. Which are the two basic risks affecting returns when shareholders value any business? Briefly explain.
- 17. Suppose a risk-neutral power plant needs 10,000 tons of coal for its operations next month. It is uncertain about the future price of coal. Today it sells for $60 a ton but next month it could be $50 or $70 (with equal probability). How much would the power plant be willing to pay today for an option to buy a ton of coal next month at today's price? (Ignore discounting over the short period of a month.) а. 5 b. 4 с. 3 d. NOTE: I KNOW THAT THE ANSWER IS (A), BUT PLEASE INCLUDE ALL THE STEPS HOW TO SOLVE THE PROBLEM BECAUSE I NEED TO PRACTICE. THANK YOU.Hello can any one help with this Economics question: A contractor spends Dollar 3,000 to prepare for a bid on a construction project which, after deducting manufacturing expenses and the cost of bidding, will yield a profit of dollar 25,000 if the bid is won. If the chance of winning the bid is ten per cent, compute his expected profit and state the likely decision on whether to bid or not to bid?36. Over the centuries several eminent thinkers have offered insights into the prob- lems of decision making in the face of risk. Which of the following lists places the the thinkers in correct chronological order, from earliest to latest? (a) Pierre Simon de Laplace, Daniel Bernoulli, John von Neumann, Christian Huygens, Amos Tversky (b) Daniel Bernoulli, Christian Huygens, Pierre Simon de Laplace, Amos Tversky, John von Neumann (c) Daniel Bernoulli, Pierre Simon de Laplace, Christian Huygens, Amos Tversky, John von Neumann (d) Christian Huygens, Daniel Bernoulli, Pierre Simon de Laplace, John von Neumann, Amos Tversky
- You have decided to invest in an open-end mutual fund. You are currently looking at a fund-Washington Premier Fund-in your newspaper. The fund is quoted as: Name NAV Net Chg YTD %RET 36.25 0.15 6.95 Assume that today's opening price of Washington Premier Fund equals yesterday's closing price. If you wanted to make your investment first thing this morning, then you should expect to pay for each share of since it Yesterday, each share of sold for $35.95 $43.50 $36.25 $34.44 $0.15 less $0.15 more $6.95 less $6.95 more If you had $8,000 available to invest, you could purchase than it did the day before, and offers a return of 294 368 assesses a 0.15% fee 276 shares of. is a no-load fund charges a 6.95% fee 221 Your evaluation of the Washington Premier Fund is made easier by the fact that: your investment choices are limited. mutual funds are careful to explicitly state their investment objectives. a mutual fund broker will select a customized mix for you. 0.15% 36.25% 6.95% for the year.Suppose Caroline is choosing how to allocate her portfolio between two asset classes: risk-free government bonds and a risky group of diversified stocks. The following table shows the risk and return associated with different combinations of stocks and bonds.CombinationFraction of Portfolio in Diversified StocksAverage Annual ReturnStandard Deviation of Portfolio Return (Risk)(Percent)(Percent)(Percent)A 0 1.50 0B 25 3.00 5C 50 4.50 10D 75 6.00 15E 100 7.50 20There is a relationship between the risk of Caroline's portfolio and its average annual return.Suppose Caroline currently allocates 75% of her portfolio to a diversified group of stocks and 25% of her portfolio to risk-free bonds; that is, she chooses combination D. She wants to reduce the level of risk associated with her portfolio from a standard deviation of 15 to a standard deviation of 5. In order to do so, she must do which of the following? Check all that apply. Sell some of her stocks and use the proceeds to purchase…One CEO justified the merger of his soft-drink company with a machine tool company inthe following manner. This is a great merger. First the products are unrelated. This out company’searnings volatility is likely to decrease. Second, our management team has proven that we are bettermanagers than the former management team of the tool company, and this we are likely to discovernew way to create and capture value within the tool company. Evaluate this explanation for themerger.
- 1. Which of the following is INCORRECT? a All of a stock's risk could be unsystematic. b. A negative beta stock has an expected return less than the risk-free rate. c. Anticipated returns on any given stock are always greater than 0. d. Two assets with a correlation of -1 could be combined to create a portfolio with a standard deviation of zero (no risk). 2. Which of the following measures the total risk of a portfolio? a. Beta b. Standard Deviation c. Correlation Coefficient d. Alpha 3. Which of the following stocks have the highest systematic risk? a A stock with high correlation to the market and high returm volatility. b. A stock with low correlation to the market and a high return volatility. c A stock with high correlation to the market and a low return volatility. d. A stock with low correlation to the market and a low return volatility. 4. Which of the following companics have the lowest systematic risk? a A company that sells soups (Campbells), beta=0.60 b. A coffee company…Deacon Corporation has just announced its intent to undertake a three-for-one stock split at the end of the next quarter. How will this announcement most likely affect trading activity for Deacon shares? O Investors will likely show increased interest in purchasing Deacon shares, thus leading to an increase in the current price per share. Investors will likely start dumping Deacon shares, thus leading to a decrease in the current price per share. Investors will likely be indifferent to the announcement, and Deacon's share price and trading volume will remain at their current levels. O Investors will likely begin to show a strong preference for purchasing odd lots of the firm's shares, thus leading to a decline in the price of round lots. eTextbook and MediaAssume 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: $145,000