Assume your portfolio standard deviation is 8 whereas the market has a standard deviation of 6.8. The correlation coefficient (R) between the two is .38. What percentage of the risk in your portfolio is unsystematic risk in this case?

Q: What is the advantage of using the Excel 2016 and after Get & Transform feature?

A: Get & Transform (also known as Power Query) in Excel 2016 and later versions provides a unified…

Q: Consider a no-load mutual fund with $440 million in assets and 20 million shares at the start of the…

A: The term net asset value or NAV is the worthiness per share of the securities of the mutual funds…

Q: Components of the cost of risk do not include: A-- the cost of issuing bonds B-- the cost of loss…

A: We will explore the components of the cost of risk and identify which option is not included in…

Q: (Related to The Business of Life: Saving for Retirement) (Future value of an ordinary annuity) You…

A: Periodic payment, PMT = $4,100Interest rate per period, r = 8%Number of periods, n = 45 yearsThe…

Q: For each of the following situations involving single amounts, solve for the unknown. Assume that…

A: Present value:The present value is calculated using the different components like interest rate,…

Q: Amazon is considering using high capacity drones that would make its product deliveries more…

A: The annual depreciation expense is equal to the initial cost of the drones divided by the number of…

Q: Term Discounting Time value of money Amortized loan Ordinary annuity Annual percentage rate Annuity…

A: Future value:Future value is calculated using the rate of return, number of years, payment per…

Q: Problem 5-7 Calculating Profitability Index Vince plans to open a self-serve grooming center in a…

A: Profitability index is the ratio of present value of future cash flows and the initial investment.…

Q: When should you use Power BI Services?

A: While a) When you want to clean, shape, and transform data is true to some extent, Power Pivot…

Q: Jessica purchases a house for $350,000 and takes a mortgage for the full amc mortgage charges 5% per…

A: Loans are paid by equal monthly installments and these monthly installments carry the payment for…

Q: City Bank pays two per cent simple interest on its savings accounts. Central Bank pays two per cent…

A: City BankInterest rate = 2% simple interestFuture value = $3,000Period = 16 yearsThe amount of…

Q: Craig's Cake Company has an outstanding issue of 13​-year convertible bonds with a ​$800 par value.…

A: Convertible Bond Par Value = $ 800Interest Rate on bond = 12%Interest rate on straight bonds of…

Q: What is the present value of 20 payments of $1,000 each received every 18 months at a discount rate…

A: Present value is the today equivalent value of the future cash flow based on time value of money and…

Q: The appropriate discount rate for the following cash flows is 9 percent compounded quarterly. Year 1…

A: Cash flows are the cash components and cash equivalents which are being transferred in and out of…

Q: a. Calculate the profitability index for each investment. (Do not round intermediate calculations…

A: In capital budgeting we look at the different projects in which a company can invest in. To…

Q: Question Workspace Check My Work (2 remaining) eBook Rader Railway is determining whether to…

A: Npv is also known as Net Present Value. It is a capital budegting technique which helps in decision…

Q: Which of the following are typical negotiable certificate of deposit (NCD) denominations? Check all…

A: A Negotiable Certificate of Deposit (NCD), often referred to simply as a CD, is a type of…

Q: (Related to Checkpoint 6.2) (Present value of an ordinary annuity) Nicki Johnson, a sophomore…

A: Here, AnnuityPurchase price of annuity (PV)Amount of money received per yearDuration of the…

Q: On January 3, 1997, a company issued bonds with an annual coupon of 9 percent, maturity of 20 years,…

A: The price of a bond is equal to the present value of coupon payments over the period of maturity and…

Q: IPS Total Return Reconsider a 3.00 percent TIPS that was issued with CPI reference of 186.6. The…

A: The return is attributed from 2 ways:Change in price Coupons received

Q: A trader signs a Forward contract on April 30 for the delivery of 500 gallons of oil on October 31.…

A: A forward contract is a financial agreement between two parties to buy or sell an underlying asset…

Q: Calculating interest rates The real risk-free rate (r*) is 2.8% and is expected to remain constant.…

A: The liquidity premium refers to the additional yield or return that investors demand in exchange for…

Q: Future value with periodic rates. Matt Johnson delivers newspapers and is putting away $15 at the…

A: Compound = Monthly = 12Payment = p = $15Time = t = 6 * 12 = 72

Q: You are thinking about leasing a car. The purchase price of the car is $30,000. The residual value…

A: Leasing occurs when one party, the lessor, agrees to let another party, the lessee, use an asset for…

Q: Consider a project with an initial investment (today, t = 0) of $200,975. This project will generate…

A: Profitability Index is also known as PI. It is a capital budgeting technique which helps in decision…

Q: Eric Poppovich invests money in two stocks for the upcoming year. His investment is shown below: #…

A: Value of  LBJ Corporation (A) =42 shares ×$36.95=$1551.9Value of Duncan Inc (B)= 20shares…

Q: Olsen Outfitters Inc. believes that its optimal capital structure consists of 65% common equity and…

A: Total capital needed for the expansion = $8.4 millionRetained Earnings (Common Equity):Amount…

Q: For each of the following cases, indicate (a) to what rate columns, and (b) to what number of…

A: The process through which the interest on a loan or investment earns interest over earlier periods…

Q: After consulting with your financial advisor, you figured that you need $9,000 per year for your…

A: Value of annuity is the present value of payments from the annuity based on the interest rate and…

Q: 123456 INCOME REGULAR OVERTIME YTD GROSS 39,675.00 RATE 20 25 HOURS 80 n 5 YTD DEDUCTIONS 9,897.82…

A: Payments are paid to the empolyees based on the hourly rate and are paid for the over time also and…

Q: Dunbar Corporation can purchase an asset for $40,000; the asset will be worthless after 14 years.…

A: To calculate the net advantage to leasing, need to compare the present value of costs associated…

Q: e Stewart Company has $2,256,500 in current assets and $947,730 in current liabilities. Its initial…

A: Current ratio shows the liquidity of the company shows the working capital needed and is calculated…

Q: Springer Corp. has $250 million of debt outstanding at an interest rate of 11 percent. What is the…

A: The advantage of debt in financing the capital is that interest payable on debt is tax deductible.…

Q: Suppose a homeowner has an existing mortgage loan with these terms: Remaining balance of $150,000,…

A: Here,ParticularsValuesRemaining balance of the loan (PV) $1,50,000.00Interest rate8.00%Number of…

Q: Simple versus compound interest nancial contracts involving investments, mortgages, loans, and so on…

A: Simple interest is simple in nature That means no interest in interest is there but in compounded…

Q: DAYS SALES OUTSTANDING Baxley Brothers has a DSO of 23 days, and its annual sales are $3,650,000.…

A: Days Sales Outstanding (DSO) is the measure the average number of days  a business to receive…

Q: a. with 6+ decimals. You will receive $10 million in 12 monthly payments (of one million each)…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: What is something the Excel Power BI tools can do that Power BI Desktop can not?

A: all the options listed (a, b, c, and d) can be accomplished in both Excel Power BI tools and Power…

Q: the next fiscal year, you forecast net income of $51,100 and ending assets of $506,900. Your firm's…

A: The debt-equity ratio helps to determine the amount of leverage in the company compared to the…

Q: Kate Berry will not invest unless she can earn at least a(n) 10% return. She is evaluating an…

A: Let the IRR or yield on this investment = iFV=PV∗(1+i)twhereFV = Future value = $4400PV = Present…

Q: A loan is to be paid by installments of $800 1-month from now, $600 3-months from now, and $500 4-…

A: Loans are paid by the amount that carry the interest on the loan and paid by the single equivalent…

Q: McGilla Golf has decided to sell a new line of golf clubs. The company would like to know the…

A: The annual cash flows for the new golf clubs project are calculated as follows:Annual cash flow =…

Q: Even though most corporate bonds in the United States make coupon payments semiannually, bonds…

A: We need to use PV function in excel to calculate bond price. The formula is =-PV(RATE,NPER,PMT,FV)

Q: What's the future value of a 10%, 5-year ordinary annuity that pays $100 each year? If this was an…

A: FV = PMT * [(1 + r)n - 1] / rwhere:FV is the future valuePMT is the payment amountr is the interest…

Q: Required: Use the information in the table below to calculate the trin ratio for October 1 and…

A: Trin ratio or arms indicator is a ratio that tells us the outlook of the market whether it is…

Q: If the 16 percent interest rate quoted on Dave’s loan had been compounded monthly, what would have…

A: Nominal rate refers to the quoted rate. This is the rate mentioned in the loan agreement or in the…

Q: What does duration tell you about the sensitivity of a bond portfolio to interest rates. What are…

A: In finance, duration is a metric used to gauge how sensitive a portfolio of bonds—or a single…

Q: The six-month zero rate is 8% per annum with semiannual compounding. The price of a one-year bond…

A: To find the one-year continuously compounded zero rate, you can use the information provided about…

Q: Consider a no-load mutual fund with $100 million in assets, 10 million in debt, and 10 million…

A: Total assets at the start of year=$100 millionDebt in beginning=$10 millionTotal assets at the end…

Q: When you retire, you wish to have $1 million in your retirement account. Currently, you have…

A: Future value is a financial term that refers to the value of an investment or asset at a specific…

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.