Calculate the weighted average growth (as a percentage) of the portfolio holding Microsoft and Nike. The total investment is $15,000. The portfolio saw 5% growth on $10,000 and 15% growth on $5,000
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Calculate the weighted average growth (as a percentage) of the portfolio holding Microsoft and Nike. The total investment is $15,000. The portfolio saw 5% growth on $10,000 and 15% growth on $5,000.
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- A portfolio manager has positions that include a £100,000 investment in A Corp and a £75,000 investment is B Corp. The position in A Corp has standard deviation of gains and losses of 35% per annum whilst the position in B Corp has standard deviation of gains and losses of 22% per annum. Gains and losses for both A Corp and B Corp are normally distributed while the returns A Corp and B Corp have correlation -0.6 (minus 0.6). When necessary, assume 252 trading days in the calendar year. Based on the above and the table in the Appendix: Calculate the 1-month 99% VaR and ES of the portfolio Calculate the 1-month 99% marginal VaR of each position. Interpret your answer Can the portfolio manager increase the position of A Corp to reduce their market risk exposure? Justify your answerA portfolio manager has positions that include a £100,000 investment in A Corp and a £75,000 investment is B Corp. The position in A Corp has standard deviation of gains and losses of 35% per annum whilst the position in B Corp has standard deviation of gains and losses of 22% per annum. Gains and losses for both A Corp and B Corp are normally distributed while the returns A Corp and B Corp have correlation -0.6 (minus 0.6). When necessary, assume 252 trading days in the calendar year. Based on the above and the table in the Appendix: 1. What is the component VaR of each position? 2. What would be the advantages and disadvantages of using Expected Shortfall rather than Value at Risk to measure the risk of this portfolioCompute the weighted-average cost of capital for a firm with the following sources of funds and corresponding required rates of return: $5 million common stock at 16%, $500,000 preferred stock at 10%, and $3 million debt at 9%. All amounts are listed at market values and the firm's tax rate is 35%.
- You are given the following information about a firm. The growth rate equals 8 percent; return of the assets (ROA) is 10 percent; the debt ration is 20 percent; and the stock is selling at $36. What is the return on equity (ROE)?In their most recent fiscal year, XYZ, Inc. had net income of $20 million and total common equity of $200 million. Also, XYZ, Inc. pays out 30% of its earnings as dividends. Using the Retention Growth Model, what is your best estimate of XYZ’s expected growth rate?Goog company has an EBIT*(1-tax) of $9,737, a depreciation of $1,851, change of NWC of $381, and a capital expenditure of $3,438. The growth rate of free cash flow is expected to be 17.68% for next two years. The beta of the firm is 1.19, the target capital structure of the firm is 6% debt 94% equity, the cost of debt is 3%, the tax rate is 40%, the market risk premium is 8% and the risk free rate is 1%. Given a comparable Price to Ebitda ratio of 14.15 and a market value of debt of $4,200, what is firm’s equity value using the FCFF approach? A. $138,792 B. $214,190 C $102,120 D $360,012 Please Explain.
- Perine, Inc., has balance sheet equity of $5.3 million. At the same time, the income statement shows net income of $763,200. The company paid dividends of $431,208 and has 120,000 shares of stock outstanding. If the benchmark PE ratio is 17, what is the target stock price in one year? Assume the firm will grow at the sustainable growth rate.Shoobee, Inc. has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average of capital. The WACC it to be measured by using the following weights: 50% long term, 10% preferred stock, and 40% common stock equity (retained earnings, new common stock issuance, or both). The firm tax is 25%. Debt: The firm can sell for P980, a 10-year, P1,000 par value bond paying annual interest at 13% coupon rate. A flotation cost of 3% of the par value is required in addition to the discount of P20 per bond. Preferred stock: 8 percent (annual dividend) preferred stock having a par value of P100 can be sold for P65. An additional fee of P2.00 per share must be paid to the underwriters. Common stock: The firm’s common stock is currently selling for P50 per share. The recent dividend paid was P4.00 per share. Its dividend payments which have approximately 60% of earnings per share in each past 6 years follows: Year Dividend 2021 P4.00 2020 3.75…(Measuring growth) If Pepperdine, Inc.'s return on equity is 17 percent and the management plans to retain 61 percent of earnings for investment purposes, what will be the firm's growth rate?
- An analyst is trying to estimate the intrinsic value of VN Co. that has a weighted average cost of capital at 10%. The estimated free cash flows for the company for the following years are: · Year 1 P3,000 · Year 2 P4,000 · Year 3 P5,000 The analyst estimates that after three years, free cash flow will grow at a constant annual percentage of 6%. What is the total intrinsic value of the company’s common stock if combined debt and preferred stock has a P25,000 market value? A. 98,556 B. 109,339 C. 78,310 D. 84,339You are given the following information about a firm: Cost of equity is 10% Cash flow to equity in the prior year is $4 million Cash flow to equity in the prior year is projected to grow 11% in the current year and then at a constant 5% annual rate thereafter. What is the value of equity of the firm?Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 30% long-term debt, 10% preferred stock, and 60% common stock equity (retained earnings, new common�� stock, or both). The firm's tax rate is 23%. Debt : The firm can sell for $1030 a 14-year, $1,000-par-value bond paying annual interest at a 8.00% coupon rate. A flotation cost of 2% of the par value is required. Preferred stock: 9.00% (annual dividend) preferred stock having a par value of $100 can be sold for $92.An additional fee of $2 per share must be paid to the underwriters. Common stock: The firm's common stock is currently selling for $90 per share. The stock has paid a dividend that has gradually increased for many years, rising from $2.00 ten years ago to the $3.26 dividend payment, D0, that the company just recently made.…
