Suppose Johnson & Johnson and Walgreen Boots Alliance have expected returns and volatilities shown here,, with a correlation of 21%. Calculate (a) the expected return and (b) the volatility (standard deviation) of a portfolio that is equally invested in Johnson & Johnson's and Walgreens' stock.

Q: 3:Consider the following financial data for a project. 1- Find the (ROR) for the project.. Ives AP…

A: ROR stands for Rate of Return. It is a financial metric used to measure the profitability or return…

Q: Debt Ratio Equity Ratio EPS DPS Stock Price 30% 70% 1.55 0.34 22.35 40% 60%…

A: According to bartleby guidelines , if multiple questions are asked then 1st question needs to be…

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A: Number of shares purchased 100 Price per share $58 New share price $48 Interest rate on loan…

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A: Creating a budget is an essential aspect of financial planning, and it becomes even more crucial…

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A: When deciding between paying cash dividends and repurchasing shares, Sunshine Travel should consider…

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A: The answers to the questions are given below

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A: When the company receives profits and distributes them among the shareholders. That share of profit…

Q: Suppose that you took out a loan at 10% interest for 283 days. If the amount of interest was…

A: Interest rate = 10% Period = 283 days Amount of interest = $852.88

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A: The question is based on the concept of Financial Management. In order to calculate the external…

Q: An investment manager based in Germany hedges a portfolio of UK gilts with a 3-month forward…

A: As per the given information: Current spot rate - GBP0.833/EUR90-day forward rate - GBP0.856/EURRise…

Q: News Corporation (US stock) has a beta of 1.37 and a required rate of return of 10.21%. If you are…

A: Here, Beta is 1.37 Required Rate of Return is 10.21% Risk Free Rate is 3.0%

Q: Sharp Co. has generated these data for the 2 most recent years where 2021 sales price was 10% lower…

A: Sales Value in year 2020 = P 1,900,800 Sales Value in year 2021 = P 1,944,000 Let Sales Price in…

Q: recover

A: a) To calculate the NPV of the project, we need to calculate the cash flows for each year and…

Q: 14. Sarah had some money in the piggy bank. On Monday, she took out money to buy a present. She had…

A: The amount initially placed in the piggy bank is the sum of money that the person had to start with.…

Q: Pick any two rival companies' income statement (in year 2021 or 2022) and calculate their marketing…

A: Two technology companies: Apple Inc. and Samsung Electronics Co. Ltd. have been selected to…

Q: n equity fund has a front end load of 4 % and special fees of 0.5% annually as well as back-end fees…

A: So when we are calculating the value of investment value of investment is affected by the…

Q: You want to buy a yacht in 4 years and have negotiated a sale price of $300,000. You must save up to…

A: Future value = $120,000 Interest rate = 12% compounded annually Period = 4 years

Q: The most recent financial statements for Live Co. are shown here: Income Statement Sales Costs…

A: Sustainable growth rate refers to the company’s growth rate that can be sustained without adding…

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A: Pensioners can have different sources of income. It makes the taxation of their income to be…

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A: The effective rate of interest takes into account the compounding of interest, which means that…

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A: Institutions that offer instruments to help institutions that invest in mortgages hedge (protect…

Q: You're prepared to make monthly payments of $260, beginning at the end of this month, into an…

A: This is related to the concept of time value of money. Amount invested today or invested each month…

Q: How did we find the NPV here for $17997? How did we find the NPV here for $17997? (Please calculate…

A: The difference between the current value of cash inflows and outflow of cash over a period of time…

Q: Give typing answer with explanation and conclusion Mr. Oldman retired from his job after 29 years 6…

A: As a government employee, Mr. Oldman is eligible for a tax exemption on his gratuity amount as per…

Q: Dora Distribution has projected the following quarterly sales. The accounts receivable at the…

A: The average number of days needed to gather the due amount from clients or customers can be defined…

Q: Calculate the fully diluted shares outstanding for the following potential target company. The…

A: The company has several dilutive instruments. The total number of shares outstanding on fully…

Q: White Knuckle Inc is considering to invest in either of the following projects. Project 1 Cash Flow…

A: Pv of cash flows = (1000*0.862 + 2000*0.7431+12000*0.6406) = 10,035 Intial investment= $10000   NPV…

Q: [Questions 12-13] Suppose that a manager is given a new project with the following cash flows: Cash…

A: NPV refers to the amount of value created by a project or an investment represented in absolute…

Q: h) discuss the relationship between the prices of puts, calls, and forward/futures contracts on the…

A: The answers to the questions are given below

Q: The most recent financial statements for Live Co. are shown here: Income Statement Sales Costs…

A: The highest rate of growth that a business may maintain without using more equity or debt to finance…

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A: The CAPM model refers to the relation between the systematic risk and the return of the stock. It is…

Q: Today's prices of 6-month call option on stocks XYZ Current price of the stock, S(t), is $50 Call…

A: A butterfly spread is an options trading strategy that involves the combination of multiple options…

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A: NPV represents the worth generated by a project in absolute profitability dollar terms. It is…

Q: Demonstrate how interest rate and currency swaps are constructed and discuss the comparative…

A: Two parties can exchange cash flows based on various interest rates or currencies using financial…

Q: A stock has a beta of 1.11, the expected return on the market is 10.5 percent, and the risk- free…

A: Beta (B) = 1.11 Market return (MR) = 10.5% Risk free rate (RF) = 4.7%

Q: You buy one Huge-Packing August European call contract and one Huge-Packing August European put…

A: Put Premium = $4.50 Call Premium = $1.25 Current Price = $50 Per Share = 100

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A: Underpricing cost = $5,250,000 Spread = $1.18 No. of shares offered (Primary offering) = 1,500,000…

Q: A person likes to deposit (800 cu) f/ for (46)years. He likes to deposit the amount a the end of the…

A: Future value of the annuity includes the amount of deposit done and amount of interest accumulated…

Q: Give typing answer with explanation and conclusion Question 1 To compensate for differences in the…

A: In capital budgeting when we compare two different projects it is not necessary that they both have…

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A: The concept of time value of money will be used here. Money invested today or deposited today grows…

Q: Which of the following project evaluation methods focuses on accounting income rather than cash…

A: Investment Appraisal Investment evaluation, often known as capital budgeting, is the process used by…

Q: ECRI Corporation is a holding company with four main subsidiaries. The percentage of its business…

A: Beta is used to measure the volatility of the stock in comparison to the overall market. If the beta…

Q: The total in rate sensitive assets for a financial institution is $120 million and the total in rate…

A: Here, Rate Sensitive Assets (RSA) are $120 million Rate Sensitive Liabilities (RSL) are $95 million…

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A: Buying any equipment involves cost and money is borrowed and so there decision making involved in…

Q: Are the following assets real or financial? a.Patents b.Lease obligations c.Customer goodwill d.A…

A: Assets play a crucial role in the financial world as they represent resources or economic benefits…

Q: Only by formula or skip pls .If a​ firm's cost of capital is​ 15%, then an investment project that…

A: Net Present Value (NPV) is a discounted capital budgeting technique. If NPV of a project is positive…

Q: ou want to open a checking account with a $500 deposit. You estimate you will write 16 checks a…

A: We open bank accounts so that we can deposit our money there, write checks to pay our bills etc.…

Q: Company S stock traded at $31.50 and with a PE of 12. Company S bought back 10% of their stock. If…

A: Stock price refers to the price at which the stocks are being bought and sold between the…

Q: Yosma manages a clothing store. In November, sales were $192,500. In December, sales were $286,850.…

A: November sales=$192,500 December sales=$286,850 Required : Rate of Change=?

Q: Below is a major portion of the income statements of KTA Inc. for 2020 and 2021: Sales Cost of Sales…

A: Here, Particulars 2020 2021 Sales 80000 97200 Cost of sales 50000 72000 Gross margin 30000…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.