Fremont Enterprises has an expected return of 14% and Laurelhurst News has an expected return of 19%. If you put 44% of your portfolio in Laurelhurst and 56% in Fremont, what is the expected return of your portfolio? The expected return on the portfolio is \%. (Rounded to two decimal places
Q: Consider a two period economy. You can buy stocks in period 0, and then sell them in period 1. You…
A: The stock’s expected return can be calculated using the Capital Asset Pricing Model (CAPM), which…
Q: What are qualitative measures that might be helpful in employee performance evaluations?
A: Employee performance evaluations are an important part of running any business. They provide…
Q: Problem 5-1 Valuing Bonds What is the dollar price of a zero coupon bond with 9 years to maturity,…
A: Yield to maturity is the expected return on a bond if it is held by the investor until maturity. It…
Q: Define balance of payments. And explain why it is useful to examine a country’s balance-of-payments…
A: The balance of payments is a record of all economic transactions between a country and the rest of…
Q: Suppose that $70,000 is invested at 7% interest. Find the amount of money in the account after 7…
A: Future value: A current asset's future value (FV), which is dependent on an estimated growth rate,…
Q: Determine the firm's 2021 tax liability. Tax liability
A: A company has to pay taxes on its profits. The tax rate is determined or set by the government and…
Q: Consider this 5-year CDS. Assume payments are made annually in arrears. Assume that default, if it…
A: The present value of the expected premium payment in year 4 can be calculated using the formula: PV…
Q: Aylmer-in-You (AMY) Inc. projects unit sales for a new opera tenor emulation implant as follows:…
A: Net Present Value : NPV takes into account the worth of money over time. The length of time until a…
Q: How much must be invested now in order to get a return of 42000$ in 6 years time if the growth rate…
A: Data given: FV=$42000 n=6 years Rate(r)=18% p.a. compounded annually Required: Amount to be…
Q: b/ Which theory best explains these three term structure facts?
A: The three term structure facts that are commonly referenced in finance literature are: The yield…
Q: (4). Gifted Heart Construction Company obtained a loan from Bay Area Bank at an interest rate of 10%…
A: Annual cost refers to the sot which is incurred on the running, periodic, and replacement expenses…
Q: 3. A company needs to decide if it will move forward with 2 new products that it is evaluating. The…
A: STEP 1 NPV NPV stands for Net Present Value. According to the NPV rule, all projects should be…
Q: Which of the following is true about WBS A. it is needed only on large projects B. it is required…
A: WBS stands for Work Breakdown Structure, it is a project management tool used to break down a…
Q: Discuss the effect if the company’s bond is downgraded. Scenic City issued bonds to build…
A: If the company's bond is downgraded, it may have a negative effect on the bond's credit rating,…
Q: Change in Accruals = [(NI-OCF) + Average Assets)-[(NI₁-1-OCF₁-1) + Average Assets. In June 2004,…
A: The "Change in Accruals" metric is a measure of the change in a company's accruals, which are…
Q: what is the cost of equity if the risk adjusted discount rate is 16%, the risk free rate is 7% and…
A:
Q: 1. What is the most accurate measure of interest rates? a) Current Yield b) Nominal Interest Rate c)…
A: Interest rates refer to the cost of borrowing money or the return on an investment. They can vary…
Q: Suppose you applied the Nelson-Siegel method to data and obtained following parameter values: 00 =…
A: The Nelson-Siegel method is a popular method for estimating the yield curve, which is a graph of…
Q: For an investment ending at time T we denote the net cash flow at time t by ct and the net rate of…
A: To adjust the cash flows for inflation, we need to multiply each cash flow by (1+e)^t, where e is…
Q: What does 'deleveraging' mean? a) Financial institutions cutting back in lending b) Financial…
A: Leverage shows how much is the debt and how much is the equity and this is very important because…
Q: When Dimi was a student, he was inspired by Professor Paepen to buy a bond. He bought a bond which…
A: Duration is a tool used to analyze the effect of interest rate movements on the price of a bond.…
Q: 10 percent down payment. Calculate how much Aryan needs to pay for the monthly installment.
A: To determine the monthly installment, we first need to determine the loan amount using the formula…
Q: 2. Caterpillar (CAT), a US multinational, wants to borrow 150 million Canadian dollars at a fixed…
A: a) One way to design a swap that will net a bank 40 basis points per annum while making the swap…
Q: 13-Your company is considering two possible projects but can only raise enough funds to proceed with…
A: Let us discuss the investment appraisal technique used in this question. 1. Payback period : This is…
Q: At the market, you can buy 8 bags of apples for $36. At the orchard, you can get 10 bags of apples…
A: There are two deals available. We have to find which one is better.
Q: Manufacturing Ltd. has projected sales of $145 million next year. Costs including depreciation are…
A: STEP 1 The exit multiple models uses a multiple of earnings to estimate cash flows when determining…
Q: Q.1) Your company expects to earn at least 18 percent on its investments. You have to choose between…
A: If the payback period is less than the total estimated time required to recover the cost of the…
Q: 24-A project has the following net cash flows Year 0 10,500 Year 1 4,486 S Year 2 3,915 S Year 3…
A: Internal rate of return (IRR)is one of the techniques of capital budgeting that take into…
Q: 8. What is not an illustration of the European sovereign debt crisis around 2011? a) Interest rates…
A: European sovereign debt crisis is a debt crises which reflects that the European countries where at…
Q: Percentage Rate (APR) of 0.032 compounded monthly (N=12), what is the Effective Annual Rate for the…
A: Given: Annual percentage rate = 3.2% Compounding monthly
Q: Your credit score is in the range of 720-739 and you want to buy a house in Davis (CA). You have 20%…
A: A mortgage refers to a loan availed against the purchase of the real estate. Real estate can be…
Q: Which of the following methods needs to define the scope A. parametric estimate B. Ballpark estimate…
A: Scope refers to the defined limits or boundaries of a project, product, or service. It encompasses…
Q: A $200,000 loan amortized over 15 years at an interest rate of 10% per year requires payments of…
A: Given, Loan Amount = $200,000 Time Period = 15 Years Rate = 10%
Q: 4. You have been offered $3,000 in 4 years for providing $2,000 today into a business venture with a…
A: The time value of money principle states that any sum today is worth more than its worth in the…
Q: KPT stock's current price is $100, over the next 3 years, the stock price will either increase 60%…
A: The binomial option pricing model is used in evaluating the price of an option by valuing both the…
Q: National Business Machine Company (NBM) has $4.9 million of extra cash after taxes have been paid.…
A: A company has surplus fund that it can invest to earn interest income or dividends. The same can…
Q: Calculate the % wage lost medical expenses, insurance administration, motor vehicle damage and fire…
A: a) To calculate the percentage of wage lost, medical expenses, insurance administration, motor…
Q: Question 1. Understanding market completeness/incompleteness. There are four assets and four states:…
A: (a) The payoff matrix A^(k) is as follows: A^(k) = [10-k 40-4k 0 0] [0 0 2+2k 2+2k] [10 40-4k 0 0]…
Q: How many days must you leave $1000 in a savings account at 5.5% to earn $11
A: To find out how many days you must leave $1000 in a savings account at 5.5% to earn $11, we can use…
Q: A small company that manufactures vibration isolation platforms is trying to decide whether it…
A: STEP 1 The net value of marketable securities coming into and going out of a business is called cash…
Q: Calculate the Rate given Portion and Base What percent of 80 is 136? %? P=R x B Rate 100% 0% $136…
A: The percentage is representative of a portion which will be expressed as a fraction of 100. It is…
Q: Blue Fire, Inc., has sales of $60 million, total assets of $42 million, and total debt of $18…
A: Note: All the given options are incorrect, so we are solving the correct one for you as per the…
Q: 2 3 4 5 6 7 8 9 ear 0 1 2 Cash Flow 58000 -34000 -45000 What is IRR for this project? If the…
A: We will use some capital budgeting tools here. Use of capital budgeting tools helps us to find if a…
Q: Byron Books Inc. recently reported $12 million of net income. Its EBIT was $29.8 million, and its…
A: EBIT stands for earnings before interest and taxes. It is one of the most important line items in…
Q: In its most recent financial statements, Nessler Inc. reported $30 million of net income and $330…
A: Retained earnings, as the name suggest, is that profit or that part of earnings of a company that…
Q: What are the major classes of securities sold by the Firm? Explain your answer with example. (Word…
A: Company requires funding for their investment which can be obtained from broadly two sources.…
Q: A construction company agreed to lease payments of $573.95 on construction equipment to be made at…
A: STEP 1 An agreement known as a lease specifies the conditions under which one party consents to rent…
Q: The current stock price is 80 EUR. The risk-free interest is 5% per annum with continuous…
A: An option is said to be on the money, when its strike price is same as the current stock price. Let…
Q: PROBLEM 14 Find how much money should be deposited in a bank paying interest at the rate of 3.5%…
A: STEP 1 The worth of a current asset at some point in the future based on an estimated rate of growth…
Q: The table above represents the regression results of Stock A's monthly excess returns versus the S&P…
A: We have to use the CAPM formula as stated below. Expected return = Risk free rate + ? * ( Market…
Fremont Enterprises has an expected return of 14% and Laurelhurst News has an expected return of 19%. If you put 44% of your portfolio in Laurelhurst and 56% in Fremont, what is the expected return of your portfolio? The expected return on the portfolio is \%. (Rounded to two decimal places.)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?You have observed the following returns over time: Assume that the risk-free rate is 6% and the market risk premium is 5%. What are the betas of Stocks X and Y? What are the required rates of return on Stocks X and Y? What is the required rate of return on a portfolio consisting of 80% of Stock X and 20% of Stock Y?Fremont Enterprises has an expected return of 16% and Laurelhurst News has an expected return of 24%. If you put 60% of your portfolio in Laurelhurst and 40% in Fremont, what is the expected return of your portfolio? (Round to 2 decimal places)
- What is the expected return of a portfolio that has $8,000 invested in S and $2,000 invested in T? The risk-free rate is 6% and the market portfolio's return is 14%. Do you expect the investment to be a good one for the coming year if betas for the two portfolio components are 0.6 and 1.3, respectively?The stock of Jones Trucking is expected to return 16 percent annually with a standard deviation of 7 percent. The stock of Bush Steel Mills is expected to return 21 percent annually with a standard deviation of 13 percent. The correlation between the returns from the two securities has been estimated to be +0.4. The beta of the Jones stock is 1.1, and the beta of the Bush stock is 1.4. The risk-free rate of return is expected to be 6 percent, and the expected return on the market portfolio is 16 percent. The current dividend for Jones is $5. The current dividend for Bush is $7. What is the expected return from a portfolio containing the two securities if 30 percent of your wealth is invested in Jones and 70 percent is invested in Bush? Round your answer to one decimal place. % What is the expected standard deviation of the portfolio of the two stocks? Round your answer to two decimal places. % Which stock is the better buy in the current market? Round your answers to one decimal…The stock of Jones Trucking is expected to return 16 percent annually with a standard deviation of 7 percent. The stock of Bush Steel Mills is expected to return 21 percent annually with a standard deviation of 13 percent. The correlation between the returns from the two securities has been estimated to be +0.4. The beta of the Jones stock is 1.1, and the beta of the Bush stock is 1.4. The risk-free rate of return is expected to be 6 percent, and the expected return on the market portfolio is 16 percent. The current dividend for Jones is $5. The current dividend for Bush is $7. What is the expected return from a portfolio containing the two securities if 30 percent of your wealth is invested in Jones and 70 percent is invested in Bush? Round your answer to one decimal place. % What is the expected standard deviation of the portfolio of the two stocks? Round your answer to two decimal places. % Which stock is the better buy in the current market? Round your answers to one decimal…
- Equity has a beta of 1.35 and an expected return of 16 percent. A risk-free asset currently earns 4.8 percent. (a) What is the expected return on a portfolio that is equally invested in the two assets? (b) If a portfolio of the two assets has a beta of 0.95, what are the portfolio weights? (c) If a portfolio of the two assets has an expected return of 8 percent, what is its beta? (d) If a portfolio of the two assets has a beta of 2.70, what are the portfolio weights? How do you interpret the weights for the two assets in this case? ExplainUPS, a delivery services company, has a beta of 1.6, and Wal-Mart has a beta of 0.9. The risk-free rate of interest is 6% and the market risk premium is 9%. What is the expected return on a portfolio with 40% of its money in UPS and the balance in Wal-Mart?Tyler Trucks stock has an annual return mean and standard deviation of 10 percent and 26 percent, respectively. Michael Moped Manufacturing stock has an annual return mean and standard deviation of 18 percent and 62 percent, respectively. Your portfolio allocates equal funds to Tyler Trucks stock and Michael Moped Manufacturing stock. The return correlation between Tyler Trucks and Michael Moped Manufacturing is .5. What is the smallest expected loss for your portfolio in the coming month with a probability of 5 percent?
- Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 11 % and 14 %, respectively. The beta of A is 0.8 % while that of B is 1.5. The T-bill is currently 6 %, while the expected rate of return of the S&P 500 index is 12 %. The standard deviation of portfolio A is 10 % annually, while that of B is 31 % , and that of the index is 20 %: If you currently hold a market index portfolio, would you choose to add either of these portfolios to your holdings? Explain. If instead you could invest only in bills and one of these portfolios, which would you choose, and why? Investor Y, who put K1 in large stocks (the S & P 500 portfolio) on December 31, 1925, and re-invested all dividends in that portfolio, would have ended on December 31, 2003, with K1992.80.Based on current dividend yields and expected capital gains, the expected rates of return on portfolios A and B are 12% and 16%, respectively. The beta of A is .7, while that of B is 1.4. The T-bill rate is currently 5%, whereas the expected rate of return of the S&P 500 index is 13%. The standard deviation of portfolio A is 12% annually, that of B is 31%, and that of the S&P 500 index is 18%.a. If you currently hold a market-index portfolio, would you choose to add either of these portfolios to your holdings? Explain.b. If instead you could invest only in T-bills and one of these portfolios, which would you choose?Your portfolio has had a 15% rate of return with a standard deviation of 18% and a beta of 1.1. The average return for the S&P 500 has been 11%, and the average return for US Treasury bills has been 2%. Calculate the Sharpe ratio, Treynor ratio, and Jensen’s alpha for your portfolio