Click to see additional instructions The yield from an investment in government stocks on the Ghana Stock Exchange is expected to be High, with a probability 027 and "Moderate with a probability of 0.48. According to market analysts from the multimedia group, cach GHS 1 invested in govemment stocks on the Ghana Stock Exchange market will yield a high return of 20% moderate return 40%, and a low return of 0.5% next year Similarly, the yield from an investment in private stocks on the Ghana Exchange is expected to be High', with a probability 0.33, and 'Moderate'with a probability of 0.35. According to market reports, each $ invested in private stocks on the Ghana Stock Exchange will yıeld a High return of 44%, a Moderate teturn of 40%, and low return of 1% next year. An investor has $813000 to invest in either government or private stocks but not both. Assume the exchange rate for the dollar to cedi currently stays at GHS 4 to a dollar. Round up your answers to two decimal places. a. The amount invested in government stocks (in GHS) when the yield is expected to be moderate is GHS b. The amount invested in private stocks (in USD) when the yield is expected to be low is USD c. The expected return for investing in govermment stocks is USD d. The expected yield for investing in private stocks when yield is high USD e. By how much the best yielding stock exceeds the least yielding stock USD
Click to see additional instructions The yield from an investment in government stocks on the Ghana Stock Exchange is expected to be High, with a probability 027 and "Moderate with a probability of 0.48. According to market analysts from the multimedia group, cach GHS 1 invested in govemment stocks on the Ghana Stock Exchange market will yield a high return of 20% moderate return 40%, and a low return of 0.5% next year Similarly, the yield from an investment in private stocks on the Ghana Exchange is expected to be High', with a probability 0.33, and 'Moderate'with a probability of 0.35. According to market reports, each $ invested in private stocks on the Ghana Stock Exchange will yıeld a High return of 44%, a Moderate teturn of 40%, and low return of 1% next year. An investor has $813000 to invest in either government or private stocks but not both. Assume the exchange rate for the dollar to cedi currently stays at GHS 4 to a dollar. Round up your answers to two decimal places. a. The amount invested in government stocks (in GHS) when the yield is expected to be moderate is GHS b. The amount invested in private stocks (in USD) when the yield is expected to be low is USD c. The expected return for investing in govermment stocks is USD d. The expected yield for investing in private stocks when yield is high USD e. By how much the best yielding stock exceeds the least yielding stock USD
Chapter17: Multinational Capital Structure And Cost Of Capital
Section: Chapter Questions
Problem 14QA
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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.
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The yield from an investment in government stocks on the Ghana Stock Exchange is expected to be High, with a probability 027 and Moderate with
a probability of 0.48. According to market analysts from the multimedia group, cach GHS 1 invested in govermment stocks on the Ghana Stock
Exchange market will yield a high return of 20% moderate return 40%, and a low return of 0.5% next year
Similarly, the yield from an investment in private stocks on the Ghana Exchange is expected to be High', with a probability 033, and 'Moderate with a
probability of 0.35. According to market reports, each S invested in private stocks on the Ghana Stock Exchange will yıeld a High return of 44%, a
Moderate teturn of 40%, and low return of 1% next year.
An investor has $813000 to invest in either government or private stocks but not both. Assume the exchange rate for the dollar to cedi currently stays at
GHS 4 to a dollar. Round up youranswers to two decimal places.
a. The amount invested in government stocks (in GHS) when the yield is expected to be moderate is GHS
15
b. The amount invested in private stocks (in USD) when the yield is expected to be low is USD
c. The expected return for investing in government stocks is USD
d. The expected yield for investing in private stocks when yield is high USD
e. By how much the best vielding stock exceeds the least yielding stock USD
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