Final fin 301_2

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Apr 3, 2024

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FIN 301_2 / Dr. Fernandez FINAL TEST FINAL TEST FIN 301-2 Use your calculator, Excel, and formula to answer all the questions. Make sure you show your work, as I will need to see it to give you credit. 1. Fill in the following tables. a. Future Values = FV = PV × (1+r) n Present Value Future Value Number of Periods Interest Rate $55,000.00 $250,000.00 50 $37,500.00 $55,000.00 25 b. Present Values = FV × [1/(1+r) n ] Present Value Future Value Interest Rate Number of Periods $25,000.00 $235,609.76 0.08 $37,000.00 $350,000.00 0.13 c. Interest rate or discount rate. Fill in the interest rate for the following table Using the interest rate formula, r = (FV/PV) 1/n – 1 Present Value Future Value Number of Periods Interest Rate $55,000.00 $250,000.00 50 $37,500.00 $55,000.00 25 d. Waiting period. Fill in the number of periods for the following table. Using the waiting period formula, n = ln(FV/PV) / ln(1+r). Present Value Future Value Interest Rate Number of Periods $25,000.00 $235,609.76 0.08 $37,000.00 $350,000.00 0.13

FIN 301_2 / Dr. Fernandez FINAL TEST 2. Bill wants to borrow $37,000 for a car. He wants to pay in a period of 4 years. The lender offers a 9% interest rate. Estimate the yearly payment and prepare a loan amortization schedule for the amortized loan. Show your work. Year Beg. Bal. Payment Interest Prin. Red. End Bal. 1 2 3 4

FIN 301_2 / Dr. Fernandez FINAL TEST 3. Using the data below, calculate Stock XYZs expected return, E(r), and standard deviation σ (r) . Show your work. State of the Economy Probability of Economic State Return in Economic State Recession 30% 27% Steady 25% 15% Boom 45% –30% E(r) = ∑Probability of Economic State × Return in Economic State σ2 (r)= ∑[Return in State i – E(r) ]2 × Probability of State i σ (r) = √ σ a. Show the range of results with a 95% probability in the table below

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s riskier? Explain. FIN 301_2 / Dr. Fernandez FINAL TEST 4. Calculate the portfolio beta for the following combination of stocks. Investment Weight Beta X $15,200 0.9 Y $13,400 1.9 Z $4,800 0.6 K $2,500 1.2 a. Compare the individual stock betas versus the portfolio’s beta. What i 5. The data below, shows the prices of S&P 500 and Proctor and Gamble (P&G). Use it to answer the following questions. S&P PG Date Close* Close 1-Jan-22 4,515.55 160.45 1-Feb-22 4,373.94 155.89 1-Mar-22 4,530.41 152.80 31-Mar-22 4,131.93 160.55 30-Apr-22 4,132.15 147.88 31-May-22 3,785.38 143.79 30-Jun-22 4,130.29 138.91 31-Jul-22 3,955.00 137.94 31-Aug-22 3,585.62 126.25 30-Sep-22 3,871.98 134.67 31-Oct-22 4,080.11 149.16 1-Dec-22 3,941.26 149.28 7-Dec-22 3,933.92 150.24 a. Get two new columns with the growth rate of the prices of S&P500 and P&G b. Produce a scatter plot with S&P in the horizontal axis.

FIN 301_2 / Dr. Fernandez FINAL TEST a. Add a trend line and find the slope. c. Do a linear regression and find Beta for P&G. a. Is this a risky asset? Why? d. Compare the slope of the trend line in the beta you obtained in the previous question. Comment. 6. Answer the following questions. SHOW YOUR WORK. a. Profits . What are the profits of the following investments? Investment Original Cost or Invested $ Selling Price of Investment Distributions Received $ Dollar Profit Bond $889.00 $880.00 $15.00 Bike $285.00 $120.00 $0.00 b. Returns. What are the returns on the following investments? Investment Original Cost or Invested $ Selling Price of Investment Distributions Received $ Percent Return Stock $2,500.00 $3,200.00 $85.00 Bike $1,520.00 $1,250.00 $0.00

FIN 301_2 / Dr. Fernandez FINAL TEST 7. Historical returns. Calculate the variance and standard deviation of Tesla Inc from 2015 to 2020. Use Excel and formulas. P&G (2018-2022) Year Return 2018 5.40% 2019 6.20% 2020 7.01% 2021 9.50% 2022 12.30% a. Write your results in the following distribution table and show the range of returns you would obtain with a 68 percent of probability. Is this a safe investment? Why?

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