Based on the following information, what is the standard deviation of returns? Probability of State of State of Economy Recession Normal Boom Economy 21 .48 31 Rate of Return if State Occurs -.089 .104 214
Q: GTO Incorporated is considering an investment costing $214,720 that results in net cash flows of…
A: Tabulate cashflow in excel as shown belowYearCash…
Q: Moerdyk Corporation's bonds have a 15-year maturity, a 5.25% semiannual coupon, and a par value of…
A: The objective of this question is to calculate the price of a bond given its maturity, coupon rate,…
Q: Determine the after-tax cash flow for 2013?
A: After tax cash flow: It can be defined as the cash generated by a business from its main operations…
Q: You deposit $3,500 at the end of the year (k = 0) into an account that pays interest at a rate of 7%…
A: Initial deposit = $3,500Interest rate in 1st year - 7% (Compounded annually)After 1 year, interest…
Q: Suppose that initially a share price is £80 and each month thereafter either increases by 1% or…
A: A mathematical model used in finance to value options is called the binomial model. It makes the…
Q: A trader buys (long) a call option with a strike price of $120 and sells (short) a put option with a…
A: The call Cost is $20Put Cost is $10The strike price for the call option is $120The strike price for…
Q: You purchase a 3-year corporate bond, which has a coupon rate of 8%, paid annually. Its par value is…
A: BOND PRICEBond price refers to the current market value of a bond, which is determined by various…
Q: A $1,000 Treasury inflation-protected security is currently selling for $965 and carries a coupon…
A: Treasury Inflation protected security also called as TIPS are offered by the government of the US.…
Q: Casey Nelson is a divisional manager for Pigeon Company. His annual pay raises are largely…
A: Initial investment = $4,000,000Useful life = 5 yearsNet operating income = $550,000Depreciation…
Q: Suppose a seven-year, $1,000 bond with a(n) 6.88% coupon rate and semiannual coupons is trading with…
A: > Given> The Face value is $1000> Coupon rate is 6.88%> Term of bond is 7 years> New…
Q: Consider the following information: Probability of State of Economy State of Economy Recession Boom…
A: Probability of Recession = 0.29Probability of Boom = 0.71Return under Recession = -0.09Return under…
Q: Acquiring Corporation is considering a takeover of Takeover Target Incorporated. Acquiring has 16…
A: Here,No. of Shares of Acquiring Company is 16 millionPrice per Share of Acquiring Company is $30No.…
Q: A firm's cash account grew by $300 over the year when the firm had cash flow from financing of -$150…
A: Operating Cash Flow (OCF) is the amount of cash a company makes from its everyday activities, like…
Q: Below are bid-ask data on the German stock index (in local currency), as well as the $/ € exchange…
A: Rate of return is the profit earned on investment based on the increase in prices and change in…
Q: Principal (after down payment) $484,500.00 APR: fixed Discount Points Monthly Payment 5.0% No points…
A: Points are amount paid as a percentage of the loan amount and these are paid to reduce the interest…
Q: A project requires an initial investment of $60 million and will then generate the same cash flow…
A: Annual cashinflow= Initial investment / Present value annuity factor,9 years,17%= Initial…
Q: A couple plans to retire in 25 years. At that time, they would like to have enough money in an…
A: The objective of this question is to find out the present value of an annuity due, which is the…
Q: You need what type of license to sell Health insurance? OP & C Security Life Health and Life
A: Health insurance is a type of insurance that helps one to cover medical expenses incurred due to…
Q: Merrill Corporation has the following information available about a potential capital investment:…
A: Initial investment = $2,500,000Annual net income = $160,000Salvage value = $170,000Depreciation =…
Q: A competitive firm O Has the market power to compete effectively. O Confronts a downward-sloping…
A: A competitive firm functions within the confines of a perfectly competitive market, marked by…
Q: Consider the following annual closing prices of stock A, value of market index (S&P 500) and…
A: The Capital Asset Pricing Model (CAPM) is a widely used financial model that establishes a…
Q: Should you replace the Defender? MARR: 12% ❑ Given: Defender Market price: $100,000 Remaining…
A: The NPV is the tool that can help find the feasibility of the replacement of one piece of equipment…
Q: A private equity fund is considering an acquisition. Using the data below, calculate the maximum…
A: Exit year assumption: 5 yearsLTM EBITDA: $400.0 millionForecast EBITDA in exit year: $750.0…
Q: 66. ABC Company has projected the following cash flows: Year 1: 85,000 Year 2: 105,000 Year 3:…
A: CF4 = 115,000Ke = 26%g = 2%
Q: Faced with financial distress, which of the following may a firm do to transfer wealth from…
A: Issue of new securities is the most common way for a firm to transfer wealth from bond holders to…
Q: You observe that a firm's ROE has increased from the previous year, but both its profit margin and…
A: The objective of the question is to identify the correct statement about the firm's financial…
Q: Riverside Bank offers to lend you $50,000 at a nominal rate of 6.5%, compounded monthly. The loan…
A: Reserve Bank offers to lend $50,000 @6.5% compounded monthly.
Q: Retlaw Corporation (RC) manufactures time-series photographic equipment. It is currently at its…
A: First we will have to calculate the cost of the project after considering the flotation costs. Once…
Q: Carpet Baggers, Incorporated, is proposing to construct a new bagging plant in a country in Europe.…
A: Net present value is the most important concept of finance. It is used to evaluate the investment…
Q: Sidney Poitier accumulated $620,000 in an RRSP. He converted the RRSP into a RRIF and started to…
A: The concept of TVM refers to the interest-earning capacity of money which makes money earned earlier…
Q: You own a stock portfolio invested 34 percent in Stock Q, 18 percent in Stock R, 36 percent in Stock…
A: Portfolio Beta= Sum of (Beta * % of Portfolio Invested)
Q: Use the following tables to calculate the present value of a $130,000, 5%, 6-year bond that pays…
A: The face value of the bond is $130,000.Maturity is 6 years.Annual coupon payments are…
Q: You are analyzing the cost of debt for a firm. You know that the firm's 14-year maturity, 8.6…
A: Yield to Maturity (YTM) is the rate of return that the bond holder will earn if he holds the Bond…
Q: If stock A earned 15% annual returns 3 years before, 5% annual returns 2 years before and 4% annual…
A: r1=15%r2=5%r3=4%Required is to calculate coefficient of variation.
Q: A firm can be worth $60 or $195 with equal probability. The firm's debt consists of a zero -coupon…
A: A zero coupon bond is a financial instrument issued at a discounted price, devoid of periodic…
Q: The Wet Corporation has an investment project that will reduce expenses by $20,000 per year for 3…
A: Depreciation year 1= Depreciation rate * Project cost= 0.3333 * 25000= 8332.50
Q: 39. In Geri Co, the 5 year weighted average historical pre-tax economic earnings are $1,250,000. The…
A: Capitalization of earnings is a method of valuation in which the earnings (usually taken on an…
Q: Svalbard Swing Company uses the accounting rate of return to evaluate investment projects.…
A:
Q: A$91,000 mortgage is to be amortized by making monthly payments for 15 years Interest is 6.7%…
A: When the lender lends a loan to the borrower, he charges a rate of interest on the borrowed amount.…
Q: Use the following information to answer this question: Windswept, Incorporated 2021 Income Statement…
A: Return on equity is the rate of return that investor will get on equity provided.The formula for…
Q: O. Compute the cash payback period. (Round answer to 2 decimal places, e.g. 10.52.)
A: The payback period is used to assess how long it will take an investment to recoup its initial…
Q: Given the following cost information about a fixed asset, calculate depreciation expense for its…
A: Cost of truck = $30,000Useful life = 5 yearsTotal units = 75,000 milesSalvage value = $3,000First…
Q: A mortgage for a condominium had principal balance of $41,200 that ha to be amortized over the…
A: Monthly payment refers to the amount paid every month for a particular period of time up to the…
Q: In 1998, the government lowered the minimum denomination of T-bills so that individuals can now…
A: A T-Bill, short for Treasury Bill, is a short-term debt obligation issued by the U.S. Department of…
Q: 1. Howell Petroleum is considering a new project that complements its existing business. The machine…
A: The NPV, IRR, etc. are the project evaluation methods that can be helpful for an investor to…
Q: Mojo Mining has a bond outstanding that sells for $2,174 and matures in 18 years. The bond pays…
A: The price of the bond (PV) is $2,174.The maturity is 18 years.The coupon rate is 7.14%.The face…
Q: QUESTION 9 Diversification can reduce the level of systematic risk. True False…
A: Systematic risk-This type of risk affects the entire market and so this risk is referred to as…
Q: A loan of $21,224 was repaid at the end of 14 months. What size repayment check (principal and…
A: Interest is the amount charged for amount of of loan borrowed.Simple Interest= Amount borrowed *…
Q: Assume the following: 2,000 SF rentable area, 4-year triple net lease at $18.00 p.s.f. per year,…
A: In the given case, the rent per month per square foot is given which needs to be multiplied with…
Q: You want to create a portfolio equally as risky as the market, and you have $500,000 to invest.…
A: The beta of a portfolio refers to the measure of the sensitivity of the portfolio return to the…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- Consider the following returns and states of the economy for TZ.Com.: Economy Probability Return Weak 15% 2% Normal 50% 8% Strong 35% 15% What is the standard deviation of TZ's returns?Based on the following information, what is the standard deviation of returns? State of Economy Probability of Stateof Economy Rate of Return ifState Occurs Recession .28 − .096 Normal .41 .111 Boom .31 .221Assuming the following returns and corresponding probabilities for Asset D: Rate of Return Probability 10% 30% 15% 40% 20% 30% Compute for: a. Expected rate of return b. The standard deviation c. The coefficient of variation
- Expected return and standard deviation. Use the following information to answer the questions. State of Economy Probability of State Return on Asset D in State Return on Asset E in State Return on Asset F in State Boom 0.34 0.08 0.29 0.19 Normal 0.55 0.08 0.17 0.11 Recession 0.11 0.08 −0.24 −0.09 a. What is the expected return of each asset? b. What is the variance of each asset? c. What is the standard deviation of each asset? Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. The input instructions, phrases in parenthesis after each answer box, only apply for the answers you will type. a. What is the expected return of asset D? (Round to four decimal places.) What is the expected return of asset E? (Round to four decimal places.) What is the expected return of asset F?…Based on the following information, what is the standard deviation of returns? State of Economy Probability of State of Economy Rate of Return if State Occurs Recession .22 −.090 Normal .47 .105 Boom .31 .215The standard deviation of return on investment a is 0.10, while the standard deviation of return on investment b is 0.04. If the correlation coefficient between the returns on A and B is_____________. A. -0.0447 B. -0.0020 C. 0.0020 D. 0.0447
- Calculating Returns and Standard Deviations Based on the following information, calculate the expected return andstandard deviation: State of Economy Probability of State of Economy Rate of Return if State Occurs Depression .15 -.148 Recession .30 .031 Normal .45 .162 Boom .10 .348The following results were obtained in a decision problem where payoffs are profits: EVSI EVwithPI 612 4300 If the efficiency of sample information is 30%, what is the maximum expected monetary value? Maximum EMV =Assuming that the rates of return associated with a given asset investment are normally distributed; that the expected return, r, is 18.7%; and that the coefficient of variation, CV, is 1.88, answer the following questions: a. Find the standard deviation of returns, sigma Subscript rσr. b. Calculate the range of expected return outcomes associated with the following probabilities of occurrence: (1) 68%, (2) 95%, (3) 99%.
- Expected return and standard deviation. Use the following information to answer the questions. State of Economy Probability of State Return on Asset R in State Return on Asset S in State Return on Asset T in State Boom 0.25 0.020 0.270 0.490 Growth 0.35 0.020 0.110 0.280 Stagnant 0.22 0.020 0.140 0.020 Recession 0.18 0.020 −0.030 −0.150 a. What is the expected return of each asset? b. What are the variance and the standard deviation of each asset? c. What is the expected return of a portfolio with equal investment in all three assets? d. What is the portfolio's variance and standard deviation using the same asset weights in part (c)? Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. a. What is the expected return of asset R? (Round to four decimal…What are the (a) expected return, (b) standard deviation, and (c) coefficient of variation for an investment with the following probability distribution? Probability Payoff 0.2 19.0% 0.7 9.0 0.1 4.0Suppose the average return on Asset A is 6.6 percent and the standard deviation is 8.6 percent and the average return and standard deviation on Asset B are 3.8 percent and 3.2 percent, respectively. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel® to answer the following questions. a. What is the probability that in any given year, the return on Asset A will be greater than 11 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the probability that in any given year, the return on Asset B will be greater than 11 percent? Less than 0 percent? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) c-1. In a particular year, the return on Asset A was −4.25 percent. How likely is it that such a low return will recur at some point in the future? (Do…
