PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 13, Problem 17PS
Abnormal returns Here are alphas and betas for Estée Lauder and Caterpillar Tractor for the 60 months ending June 2017. Alpha is expressed as a percent per month.
Explain how these estimates would be used to calculate an abnormal return.
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In 2017 and 2018, Organigram (ticker symbol: OGI) earned returns of 18.18% and −5.34%, respectively. In 2019 and 2020, they earned returns of 20.57% and 8.73%, respectively. Given this information, Organigram’s variance of returns during 2017-2020 was
a. .01658
b. .00631
c. .01842
d. .11753
e. .01381
he following data represents the annual sales of a Digitech Automation products SAOG.
Year
2014
2015
2016
2017
2018
Sales (in Millions)
OMR
380
440
520
396
514
Use method of least squares to calculate the trend values and the forecast for the future period.
Which of the following is the annual sales forecast for the year 2019 using least squares method?
a.
539.6 Million OMR
b.
584.4 Million OMR
c.
606.8 Million OMR
d.
562 Million OMR
Suppose the returns on an asset are normally distributed. The historical average annual return for the asset was 5.7 percent and the standard deviation was 18.3 percent.
a.
What is the probability that your return on this asset will be less than –4.1 percent in a given year? Use the NORMDIST function in Excel® to answer this question. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b.
What range of returns would you expect to see 95 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
c.
What range of returns would you expect to see 99 percent of the time? (Enter your answers for the range from lowest to highest. A negative answer should be indicated by a minus sign. Do not round intermediate calculations…
Chapter 13 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 13 - Market efficiency True or false? The...Ch. 13 - Prob. 2PSCh. 13 - Market efficiency Which (if any) of these...Ch. 13 - Prob. 4PSCh. 13 - Market efficiency How would you respond to the...Ch. 13 - Market efficiency Respond to the following...Ch. 13 - Prob. 7PSCh. 13 - Prob. 8PSCh. 13 - Market efficiency evidence Which of the following...Ch. 13 - Prob. 10PS
Ch. 13 - Prob. 11PSCh. 13 - Prob. 12PSCh. 13 - Market efficiency implications What does the...Ch. 13 - Prob. 14PSCh. 13 - Prob. 15PSCh. 13 - Abnormal returns Here are alphas and betas for...Ch. 13 - Prob. 18PSCh. 13 - Behavioral finance True or false? a. Most managers...Ch. 13 - Prob. 20PSCh. 13 - Prob. 21PSCh. 13 - Prob. 22PS
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