Business

FinanceQ&A LibraryI am currently working on some practice problems for finance and need help setting them up as well as calculating them: 10) between 1980 and 2000, the standard deviation of the returns for NIKKEI and DJIA indexed were 0.08 and 0.10 respectively, and the covariance of these index returns was 0.0007. what was the correlation coefficient between the two market indicators? 12) consider two securities, a and b. securities a and b have a correlation coefficient of 0.65. security a has a standard deviation of 12% and security b has standard deviation of 25% calculate the covariance between the two securities a stock has a beta of the stock equalling to be 1.25. the risk free rate is 5% and the market risk premium is 6%. the estimated return for the stock is 14%. according to the CAPM you should a) sell because it is overvalued b) sell because it is undervalued c) buy because it is overvalued d) buy because it is undervalued e) short because it is undervaluedStart your trial now! First week only $4.99!*arrow_forward*

Question

I am currently working on some practice problems for finance and need help setting them up as well as calculating them:

10) between 1980 and 2000, the standard deviation of the returns for NIKKEI and DJIA indexed were 0.08 and 0.10 respectively, and the covariance of these index returns was 0.0007. what was the correlation coefficient between the two market indicators?

12) consider two securities, a and b. securities a and b have a correlation coefficient of 0.65. security a has a standard deviation of 12% and security b has standard deviation of 25% calculate the covariance between the two securities

a stock has a beta of the stock equalling to be 1.25. the risk free rate is 5% and the market risk premium is 6%. the estimated return for the stock is 14%. according to the CAPM you should

a) sell because it is overvalued

b) sell because it is undervalued

c) buy because it is overvalued

d) buy because it is undervalued

e) short because it is undervalued

Tagged in

Business

Finance

Find answers to questions asked by students like you.

Q: What is the future value of $875 deposited for one year earning an 8 percent interest rate annually?

A: Future value can be described as the future worth of a specific amount at a certain future date.It i...

Q: A Forwand contracts have no defalt risk B Futures contracts roquire an initial margin requirement be...

A: In short position, for future contract if the price of the contract raises, the seller become obliga...

Q: Fran Powers created following budget and reported actual spending listed. Calculate the variance for...

A: Variance:The variance can be defined as the anticipation of the squared unconventionality of a rando...

Q: ERC is the largest logging company in the United States. Their logging reserves are being depleted ...

A: The amount received by shareholders on periodic basis against providing equity to company is known a...

Q: You have a loan outstanding. It requires making five annual payments of $7,000 each of the end of th...

A: In order to remain indifferent between the two options,One large payment at the end of the loan’s te...

Q: Can someone please just give me the right answer to the right decimal places for the last part, "How...

A: It is given that,Required accumulated amount is $860,000.Number of years is 11. So, total number of ...

Q: he newspaper reported last week that Tisch Enterprises earned $34.17 million this year. The report a...

A: Hi, as per our policy we will answer the first three parts. Kindly repost the remaining parts separa...

Q: WHICH OF THE FOLLOWING STATEMENTS IS MOST CORRECT? A. IF A FIRM'S EXPECTED BASIC EARNING POWER (BEP...

A: Basic Earning Power (BEP) RatioIt represents that the how much a firm’s assets able to generate oper...

Q: An analyst uses a two-stage variable growth model to estimate the value of Old Maid Company's common...

A: d)Computation of value of the stock attributable to years 4 and beyond is as follows:

Q: You purchase a home and secure a 30 year equal payment loan for $200,000 at a interest rate of 5.25%...

A: The number of months to stay will be around 6 months.

Q: Brandt Corporation's 30-year bond has 10 years left until maturity. The 8% coupon bond has a par val...

A: Part 1:We calculate the current yield by dividing the coupon payment by current price of the bond.

Q: Constamt urowtl ASset valuauon ти ויקסדד 10. A company plans to pay a dividend of $3.20 exactly one ...

A: According to Gordon growth model, when the dividends are paid indefinitely and are expected to grow ...

Q: You would Ilike to have $59,000 in 5 years for the down payment on a new house following graduation ...

A: Note: No intermediate rounding is done, only the answer is rounded off to nearest whole number.a) Do...

Q: Thank you for answering question 3. I need the answers to 4 and 5 as well because the cash flows are...

A: 4.Computation of NPV:

Q: Finance help

A: The purchase cost of new equipment is $328,000 and installation cost is $109,000. So, the total cost...

Q: Question 2. Suppose the current ZCB prices for maturity in two years and in five years are 0.8 and 0...

A: If Pn is the price of ZCB with maturity of n years and Sn is the spot rate for year n then,Pn = (1 +...

Q: What is calculation of before Tax (Equity) Cash Flow? Please provide example.

A: The cash flow, which is generated by an investment after deducting all payments of all expenses from...

Q: You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% ...

A: Following information is given in the question:

Q: Why do most acquisitions fail to create shareholder value?

A: Mergers and acquisitions generally failed to create or add value for the shareholders because of ove...

Q: Atlantic Corporation is the largest logging company in the north eastern part of the United States. ...

A: a) According to the information provided, dividends are declining at a rate of 5% per year. Dividend...

Q: The next dividend payment by Grenier, Inc., will be $1.64 per share. The dividends are anticipated t...

A: Question 1:Calculation of Dividend Yield and Capital Gains Yield:The dividend yield is 5.29% and cap...

Q: 7 Bond A's is a 15 year bond with current price is $933 and it has an $80 annual coupon. Bond B's is...

A: a) Bond A has an annual coupon of $80, current price $933 and 15 years to maturity.Yield to maturity...

Q: "Assume you graduate with $31,300 in student loans with an interest rate of 5.25% compounded annuall...

A: The loan amount consists present value of all future payments.It is given that,Loan amount is $31,30...

Q: Debt Management Ratios Trina's Trikes, Inc. reported a debt-to-equity ratio of 1.94 times at the end...

A: Debt to equity ratio = Debt / Equity = 1.94Debt = $ 10.60 million

Q: You are the CFO of Oriole, Inc., a retailer of the exercise machine Slimbody6 and related accessorie...

A: Incremental cash flow at the beginning of the project = -( initial investment in the store + initial...

Q: find the interst periodic deposit 4000 rate .055 time 40 years

A: Assumption:It is assumed that the periodic deposit of $4,000 is compounded annually at the rate of 5...

Q: You are a management trainee in one of the Manufacturing companies based in Johor, Malaysia. The com...

A: The value of the firm is dependent upon the future cash flows and the discount rate. In the absence ...

Q: What mortgage would result in a higher payment? Mortgage A $985 a month for 30 years or Mortgage B ...

A: Click to see the answer

Q: The Data General Company is expected to pay an annual dividend of $2.53 at the end of the year. Thei...

A: Computation of required rate of return:Required rate of return is 15.81%.Excel spread sheet:

Q: ABC requires an investment of $50,000 and borrows $20,000 at 6%. If the return on equity is 15%, wha...

A: Total capital required, C = $ 50,000Debt = D = 20,000Hence, equity = E = C - D = 50,000 - 20,000 = 3...

Q: The Panama Canal Store has preferred stock that was selling last month for $15 per share. The divide...

A: Calculate the current dividend as follows:

Q: Eastman Publishing Company is considering publishing a paperbadk textbook on spreadsheet application...

A: Calculate the breakeven point as follows:

Q: Can someone please just give me the right answer to the right decimal places for the last part, "How...

A: Calculation of interest was earned during the third quarter of the 4th year:The interest was earned ...

Q: A preferred stock from Hecla Mining Co. (HLPRB) pays $5.00 in annual dividends. If the required re...

A: The preferred stocks are the stocks on which preference is given to the stockholder while distributi...

Q: Suppose that some commercial bank has $100M in deposits and $20M in capital. Assuming a 10% minimum ...

A: Calculation of maximum amount of loan and securities bank can hold:Answer:The maximum amount of loan...

Q: A. VI00.58 B. V98.55 C. VI01.68 D. 497.42 E. V103.50 An investor starts with $1 million and converts...

A: Calculate the end-dollar amount by Converting 0.7795 million pounds into dollars using exchange rate...

Q: You are a management trainee in one of the Manufacturing companies based in Johor, Malaysia. The com...

A: As a management trainee, the answer for the CFO question will be that it is not easy to identify a d...

Q: You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.)...

A: Please see the white board where I have summarized the information, in a tabular form. All financial...

Q: 6:04 IMG_0741.jpg X Given the soaring price of gasoline, Ford is considering introducing a new produ...

A: To determine the incremental annual cash flow from operations, we need to first compute the contribu...

Q: O'Leary, Inc., is expected to maintain a constant 5.2 percent growth rate in its dividend indefinite...

A: Required rate of return on the stock is the sum of the company’s dividend yield and capital gains yi...

Q: How much money should be deposited today in an account that earns 5% compounded semiannually so that...

A: Let P be the amount to be deposited today.r = rate per annum = 5%m = frequency of compunding in a ye...

Q: Questions are on image

A: (1)Computation of closing stock and cost of goods sold is as follows:Calculation:Therefore, the valu...

Q: Executives at XYZ Corporation realize that they have too much liquid assets. They want to use this c...

A: Calculate the expected return and standard deviation as follows:

Q: Consider the following table, which gives a security analyst's expected return on two stocks for two...

A: Expected rate of return can be described as the summation of all likely return on the investment wit...

Q: Produce a projected capital budgeting cash flow statement for the Sneaker 2013 project Answer the fo...

A: To calculate net cash flows, one needs to ascertain net income. Following steps have been attached t...

Q: During times of rising inflation, are investments with fixed returns like a bond or bank CD attract...

A: Inflation is the time in the economy when consumer prices of goods and services are high enough and ...

Q: 1H 3. Express the percent as a decimal. Coo 16.as%o 480% = LRo9u180 4.8 /00 4. As part of a fundrais...

A: Your answer to Q - 3 is correct. Hence, I am straightway moving to Q - 4.

Q: Explain how a firm that never files for bankruptcy can still suffer from indirect bankruptcy costs. ...

A: Indirect Bankruptcy Costs:Those costs which occur on a firm and pressurized the firm to file the ban...

Q: 12. You are considering the purchase of a tract of timber land today as an investment. Last years ti...

A: Calculate the current price of the land as follows:

Q: Which of the following best explains why a firm that needs to borrow money would borrow at long-term...

A: The short-term rates of interest are much volatile when compared to the long-term rates of interest....