The prices of an asset in Week 1 and Week 2 are $1500 and $1570, respectively. If the asset price changes at the same geometric rate of return of Week 2, what would be the asset price in Week 3?
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The prices of an asset in Week 1 and Week 2 are $1500 and $1570, respectively. If the asset price changes at the same geometric
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- Suppose initially that two assets, A and B, will each make a single guaranteed payment of $400 in 1 year. But asset A has a current price of $280 while asset B has a current price of $320. Instructions: Round your answers to 2 decimal places. a. What are the rates of return of assets A and B at their current prices? Return on assetA =| |percent Return on asset B = percent Given these rates of return, which asset should investors buy and which asset should they sell? Buy asset (Click to solect) v and sell asset (Click to select) b. Assume that arbitrage continues until A and B have the same expected rate of return. When arbitrage ends, will A and B have the same price? (Click to select) Next, consider another pair of assets, C and D. Asset C will make a single payment of $600 in 1 year, while D will make a single payment of $800 in 1 year. Assume that the current price of C is $440 and that the current price of D is $680. c. What are the rates of return of assets C and D at their…Assume the returns from holding an asset are normally distributed. Also assume the average annual return for holding the asset a period of time was 16.3 percent and the standard deviation of this asset for the period was 33.5 percent. Use the NORMDIST function in Excel® to answer the following questions. a. What is the approximate probability that your money will double in value in a single year? (Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places, e.g., 32.161.) b. What is the approximate probability that your money will triple in value in a single year? (Do not round intermediate calculations and enter your answer as a percent rounded to 8 decimal places, e.g., 32.16161616.) a. b. X Answer is complete but not entirely correct. Probability Probability 0.624 % 0.00000200 X %Suppose that we can describe the world using two states and that two assets are available, asset K an asset L. We assume the asset’s future prices have the following distribution State Future Price Asset K Future Price Asset L 1 $55 $60 2 $45 $30 The current price of asset K is $50, and the current price of asset L is $50. 1. What are the values of the unit claims (C1 and C2 )?
- Assume the returns from holding an asset are normally distributed. Also assume the average annual return for holding the asset a period of time was 16.3 percent and the standard deviation of this asset for the period was 33.5 percent. Use the NORMDIST function in Excel® to answer the following questions. a. What is the approximate probability that your money will double in value in a single year? (Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places, e.g., 32.161.) b. What is the approximate probability that your money will triple in value in a single year? (Do not round intermediate calculations and enter your answer as a percent rounded to 8 decimal places, e.g., 32.16161616.) a. b. Probability Probability Answer is not complete. 0.624 % %Assume the returns from holding an asset are normally distributed. Also assume the average annual return for holding the asset a period of time was 17.1 percent and the standard deviation of this asset for the period was 35 percent. Use the NORMDIST function in Excel to answer the following questions. a. What is the approximate probability that your money will double in value in a single year? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places, e.g., 32.161. b. What is the approximate probability that your money will triple in value in a single year? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 8 decimal places, e.g., 32.16161616. a. Probability b. Probability % %ok Assume the returns from holding an asset are normally distributed. Also assume the average annual return for holding the asset a period of time was 15.4 percent and the standard deviation of this asset for the period was 33.3 percent. Use the NORMDIST function in Excel to answer the following questions. a. What is the approximate probability that your money will double in value in a single year? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places, e.g., 32.161. b. What is the approximate probability that your money will triple in value in a single year? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 8 decimal places, e.g., 32.16161616. ences a. Probability b. Probability % %
- Please plot a sensitivity graph for annual worth versus initial cost, annual revenue, and salvage value, varying only one parameter at a time, each within the range of +/− 50%An asset has a current price of $80 and it has an expected price of $95 in 6 months. In yourassessment, the standard deviation (σ) is 0.45. The reference rate is 5.5percent. The value to the short and to the long would be?Based upon the information below calculate the Expected Return of the Asset (E)= ∑ Pr * R Worst Case .25 13% Most Likely .50 15% Best Case .25 17% 13.5 Select 14.25 as your answer 14.25 Select 15 as your answer 15 Select 15.5 as your answer 15.5
- A project that was analyzed under the assumption of 3% inflation was found to have a unadjusted internal rate of return (IRR) of 18%. What is the real IRR for the project?Consider the case of two financial assets and three market conditions (states). The tablebelow gives the respective probability for each market condition and the return of each assetin each one of them. Market Conditions state Recession Normal Expansion Probability of state 30% 40% 30% Return of asset A -30% 20% 55% Return of asset B -10% 70% 0% Estimate the equation of the efficiency frontier.VMIC Corp. has asked you to look at the following data. The interest rate is 10%. (a) What is the new asset’s minimum cost life? (b) When, if at all, should we replace the existing asset with the new asset?