Please show full working a. What is the portfolio mean & variance (arithmetic only): i. For an equally weighted portfolio ? ii. For a market-value weighted portfolio ?(use market cap as of the beginning of the period)

Q: Calculate the bank discount and proceeds (in $) for the simple discount note. Use the ordinary inter...

A: The bank discount as per ordinary interest method is calculated with the help of following formula  ...

Q: Exercise 2 (Basic Present Value Concepts) Each of the following parts is independent. (Ignore income...

A: Note: Since you have specified 2 questions out of 3 multiple questions, we can solve only the first ...

Q: Delta Sonic, a chain of full service automotive detailers, is considering introducing a new 15-minut...

A: To Find: Projected incremental sales

Q: Bulldogs Inc. is given terms of 2/10, net 45 by its suppliers. If Bulldogs Inc. forgoes the cash dis...

A: Answer- Calculation of annual interest rate cost-  Cost of not taking discount-   = [2% / (100% - 2%...

Q: Case Analysis 1. in 1982, XYZ cement company began its plant operation in Pampanga. Local residents ...

A: Problems faced by residents due to XYZ cement company:: i) Loud noise - Remark:: Causing sound pollu...

Q: Altoona Company is considering replacing a machine with a book value of P200,000, a remaining useful...

A: Given: Cost of machine = P320,000 Life = 4 Savings operating cost = P100,000 Tax = 40%

Q: A share of Fantastic Four sells for $85. A call on its share with exercise price of $80 sells for $6...

A: Share price refers to the price of each share of shareholder’s equity or it is the cost to purchase ...

Q: Use the ordinary interest method to compute the time (in days) for the loan. Round your answer up to...

A: Given Principal is $7100 Rate is 10.4% Interest $225.

Q: Azhar invested RM X in an account that earn 5% simple interest rate for a tenure of 6 years. While h...

A: Investment by Azhar = X Investment by spouse = X + 2000 Interest rate (r) = 5% simple interest n = 6...

Q: Haliford Corporation expects to have eamings this coming year of $2.986 per share. Haliford plans to...

A: The share price which is the maximum price to be paid for share consists of dividends and terminal v...

Q: The economic order quantity of Lancer Inc. is 1,000 unit. They sold their sole product for a selling...

A: EOQ refers to the point where the ordering and carrying costs are equal. Because an imbalance in ord...

Q: 200,000, a fast food corporation may purchase the building and land required to open a new shop. Ins...

A: The monthly payment are done considering the interest and value of the building and value of buildin...

Q: 1. Financial Forecasting vs. Financial Modelling. Explain the difference.

A: In finance we often use financial forecasting as well as financial modelling. Though both financial ...

Q: (Related to Checkpoint 5.5) (Solving for n) Jack asked Jill to marry him, and she has accepted under...

A: We will have to use the concept of time value of money. As per the concept of time value of money th...

Q: The broad stock market's P/E ratio (the inverse of its earnings yield) tends to rise as treasury yie...

A: With increase in yield on the treasury will increase the earning expectation of the market and requi...

Q: Suppose that your parents decide tổ make deposits into a savings account, With the first deposit bei...

A: Given,on the child 18th birthday, Annual withdrawal = $2000, $2,400, $2,800, $3,200Annual Interest r...

Q: A higher average daily disbursement float than average daily collection float is more desirable for ...

A: Account payables are the payments to be done to the supplier and vendors and they provide credits an...

Q: What deposit made at the beginning of each month will accumulate to P120,000 at 8% compounded semi-a...

A: Future Value = P 120,000 Interest Rate = 8% compounded semi-annually Time Period = 10 Years

Q: As a Businessman and Entrepreneur, which do you think is more important between Return On Asset (ROA...

A: ROA is the return on assets and ROI is the return on investment.

Q: A customer is going to buy a brand new pump and motor. It has an initial cost of $10,000. The lifeti...

A: To break even, present value of inflows shall be equal to the initial cost of the project.

Q: In January 2021, you buy a 10-year coupon bond with coupon payments of $10,000 per year and a final ...

A: A Bond refers to an instrument that represents the loan being made by the investor to the company an...

Q: If a company declares a $0.30 dividend and you own 100 shares, how much dividends will you receive?

A: A dividend is a monetary payment made by a company to its shareholders who are eligible to receive i...

Q: Beryl's Iced Tea currently rents a bottling machine for $52,000 per​ year, including all maintenance...

A: The difference between the current worth of cash inflows and withdrawals over a period of time is kn...

Q: Bulldogs Inc. has forecasted that its net income will be P520,000. The company has an debt-to-equity...

A: Funding amount = P 600000 Debt to equity ratio = 25%

Q: If the discount rate is 6 percent, then the project's NPV is $ (Round to the nearest dollar.)

A: Net Present Value (NPV): It represents the investment's profitability in dollar amounts. It is compu...

Q: Bulldogs Inc. sells on term 3/20, net 40. Total sale for the year are P1,200,000 on which 40% is cas...

A: Total Sales =  P1,200,000 Cash Sales = 40%  

Q: The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out- the m...

A: For a put option if the Strike price is more than the underlying or current stock price then the put...

Q: You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two ...

A: We need to calculate present value of both options by using present value of ordinary annuity formul...

Q: You have found three investment choices for a one-year deposit: 10.4% APR compounded monthly, 10.4% ...

A: Effective annual rate = ( 1 + r / n )n - 1r = Annual percentage raten = durationa) EAR of the first ...

Q: What is the present discounted value of the call option? What would the present discounted value of...

A: A call option gives the holder a right but not an obligation to buy shares at a predetermined price ...

Q: If you have been hired at an annual salary of $23000and expeck to receive annual increases of 5% wha...

A: Your annual wage is the amount of money paid to you by your employer over the course of a year in ex...

Q: Lush Gardens Co. bought a new truck for $50,000. It paid $5,000 of this amount as a down payment and...

A: Cost of truck = $50,000 Down payment = $5000 Loan amount (PV) = 50,000-5000 = $45,000 Interest rate ...

Q: The working capital financing policy that would put a company to the highest level of risk is the on...

A: Working capital is the management of the current assets of a company and paying the short term oblig...

Q: A school service van is available for purchase at P23,000 bimonthly. The first payment is due at the...

A: Bimonthly payment = P23000 Interest rate = 14% Bimonthly interest rate = 14%/6 = 2.33333333333% Numb...

Q: You want to start saving for your first car which costs R300 000. You decide to save by investing in...

A: The investment made monthly grow to much larger amount due to the power of compounding over the peri...

Q: Which do you prefer: a bank account that pays 5.5% per year (EAR) for three years or a. An account t...

A: Current EAR is 5.5% per year Time Period is 3 years Case-a: When interest rate is 2.8% every six mon...

Q: hat single payment now is equivalent to a uniform series of $1000 per year for 20 years, beginning 6...

A: The present value of annuity considering the interest rate and period would give the single payment ...

Q: Bond A is zero-coupon bond paying $100 one year from now. Bond B is a zero-coupon bond paying $100 t...

A: Bonds Bonds are the liabilities of the company which is issued to raise the funds required to financ...

Q: Lia plans to buy a house for Php 158482. She wants to make a down payment of Php 23912 and to take o...

A: House cost = Php 158482 Down payment = Php 23912 Loan amount (PV) = 158482-23912 = Php 134570 Period...

Q: MM Proposition 2: McLaren Corp is financed entirely by common stock and has a beta of 1.0. The firm ...

A: Value of the unlevered firm When the firm has all equity in its capital structure and has no debt co...

Q: You are looking to buy a car and you have been offered a loan with an APR of 6.2%, compounded monthl...

A: APR = 6.2% monthly compounded  

Q: Assume that you have just won the lottery. Lotto officials offered you the choice of two alternative...

A: Solution:- Every rational individual will select that option, the present value of which is higher. ...

Q: Calculate the future value of an ordinary annuity consisting of annually payments of $1,500 for 6 ye...

A: An ordinary annuity is that annuity in which payments are made at the end of each period.

Q: .Use the exact interest method (365 days) and the ordinary interest method (360 days) to compare the...

A: Exact Interest: Exact interest computes the interest that is based on a year having 365 days. Ordi...

Q: Allen Inc. took out a 1-year, 8%, $100,000 loan on March 31, 2018. Interest is due upon maturity of ...

A: Solution:- When an amount is borrowed, the lender charges interest on it and at the maturity, princi...

Q: Compute the Terminal cash flow. Compute the FCF for years 1 through 5 Compute the project’s NPV and ...

A: Companies only invest in positive NPV projects. NPV method is a method of project appraisal. It disc...

Q: 8.14 (LG 8.5, 8.10) What is the after-tax present worth of a chip placer if it costs $55 000 and sav...

A: With the help of the given data we will first make a table representation for showing up the computa...

Q: ne company's total sales are million. (Round to one decimal

A: Dupont analysis refers to the framework established by the Dupont corporation for analyzing the perf...

Q: Plymouth and Brockton Bus Lines (P&B) is a regional bus transportation company that operates in East...

A: Given, Two models OR 5000 and SNS 2000. The discount rate is 11.1%  

Q: Barry has applied for a loan in the amount of $10,500. A bank figures that Barry will repay the loan...

A: Loan amount = $10500 Probability of repayment = 0.93 Probability of default = 0.07 Let the interest ...

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

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.