risk transformtion in banks

Q: A credit card is which of the following? Is nothing more than a tool   Is one part of a comprehensi...

A: A credit card is a sort of payment card in which charges are made against a line of credit rather th...

Q: Question 7 Given the following information for three publically traded comparable companies, estimat...

A: Unlevered beta When a company has both equity and debt in its capital structure, its beta is termed ...

Q: After the repurchase how many shares

A: Shares are the equity ownership of the corporation. Dividends to be paid out of profits to all the e...

Q: Bulldogs Inc. 4-year long-term bonds currently yield 11%.  The real risk-free rate is 3%.  The matur...

A: The yield on the bond is sum of risk free rate and inflation and maturity risk premium and default a...

Q: Consider the following $1,000 par value zero-coupon bonds: Bond Years to Maturity Yield to Maturity ...

A: Data given: Years to maturity          Yield to maturity 4                                     7.95%...

Q: Assume the marginal corporate tax rate is 28%. The firm has no debt in its capital structure. It is ...

A: Value of unlevered firm (Vu) = $92,393,301 Debt (D) = $50,000,000 Tax rate (T) = 28%

Q: GRAPH SETTINGS Reset Country-X Initial Value ($50 – $10,000) 1,000.00 Value (thousands of dollars) [...

A: Future value of a present value is the value of that amount after taking into account the time value...

Q: 3 | I5 LTN Best, worst, and average returns for various stock/bond allocations, 1997-2019 Portfolio ...

A: Data given::                         Bond                 Stock  Investment %                  ...

Q: Josh is out of work. He had worked $7,290 and also in June, July, and A Unemployment compensation in...

A: Unemployment compensation is given by the government to help unemployed people to help them in livin...

Q: You are ready to make a new car purchase and the manufacturer is offering a 60-month, zero percent i...

A: Given: Period 60 months Interest rate = 0% Cash rebate = $1,500 Price of the car = $25,000

Q: at inflation is expected to steadily increase in the years ahead, but that the real risk-free rate r...

A: The interest is directly related to rate of the inflation but real interest do not depends on the ra...

Q: pose the central bank wishes to increase the money supply by $500 million s so by purchasing one-yea...

A: The money supply is function of central bank and depending on the requirement of economy the central...

Q: Calculate the project's cash payback period. (Round answer to 2 decimal places, eg. 15.25) Cash payb...

A: Payback period is the period within which the sum invested by the company in a project will be recei...

Q: Two types of heat exchangers (y and z) would like to compare the cost of use in a particular chemica...

A: EUAC is uniform equivalent annual cost which is equivalent all cost including the cost of acquisitio...

Q: Assume that ASX 300 Index represents the risky portfolio. Calculate the annual return for the period...

A: Annual return is a return percentage of profit or loss occurring in one year of holding period to th...

Q: The following data is available for three different alternatives. The do nothing is an available opt...

A: Initial cost of A (C) = $20000 Annual benefits = $6607 Annual Cost = $1000 Useful life = Infinite du...

Q: Alain Dupre wants to setup a scholarship fund for his school. The annual scholarship payment is to b...

A: First We need to write down the Values given in the Question i.e  Annual scholarship payment = $3500...

Q: Consider two firms – Alpha Co. and Omega Co. – that operate in the manufacturing of mountain bikes a...

A: Degree of operating Income (DOL ) helps in identifying and quantifying the Operational risk of the c...

Q: at period of time could you pay back a loan of $3000 by making monthly payments of $110 if interest ...

A: Loans are paid by the equal amount of monthly payments these payments carry the payment of principal...

Q: An annuity with a cash value of $14,000 earns 5% compounded semi-annually. End-of-period semi-annual...

A: Future value can be calculated using FV (rate, nper, pmt, [Pv], [type]) Rate The interest rate Nper...

Q: A company is considering increasing the period of credit 45 days. Annual sales are currently £1,200,...

A: Company increase the credit period to increase the sales and profit but that requires amount of mone...

Q: how much can we paid in scolarships at the end of half year if $90.000 is deposited in a trust fund ...

A: Amount Deposited = $90,000 Annual Interest Rate = 8.5%Semiannual Interest Rate = 8.5% / 2Semiannual ...

Q: B. REDRDER POinT? GIven: VEAD TimE = 1 WEEK AUERAGE USAGE = 7,000 units per uk. THERE ARE 50 WORKING...

A: Solution:- Re-order point is the point which tells that when should a firm places next order to its ...

Q: The balance in the account will be $ (Round the final answer to the nearest cent as needed. Round al...

A: Time value of money (TVM) is used to measure the value of money at different point of time in the fu...

Q: What would be the value of the firm if it issued $50 million in perpetual debt and repurchased the s...

A: Value of the firm refers to the total value of either assets or equity and liabilities of a company....

Q: udy has just completed the development of a better face shield for health workers. The new product i...

A: Annual revenue = $150,000 Investment = $9000.34 Life = 5 years Salvage value = $3000 Working capital...

Q: The purchase price of a condominium is $122,000. A down payment of 22% is made. The bank charges $73...

A: Solution : Given, Purchase price = $122,000 Down payment = 22% Bank charges =  $730   Now, Firstly w...

Q: Ahsan, an individual investor, is evaluating the investment opportunity. To evaluate this in ollecte...

A: Expected rate is the average rate of return considering the the probability of the return. Expected ...

Q: Which of these is not typically a responsibility of a property manager? Maintenance programs O Marke...

A: Property manager is the person who sees the day to day working of the real estate.The responsibility...

Q: An investor is considering an investment that will pay $2,290 at the end of each year for the next 1...

A: Solution:- When an equal amount is paid each period at end of each period, it is called ordinary ann...

Q: 40. Jim has earned an average of $3,290 per month over his lifetime. He is planning to retire at 66,...

A: Solution:- Retirement benefit means the amount of money payable to a person when he/she retires from...

Q: A credit union pays 7.7% annual interest compounded daly. What deposit today (present value) would a...

A: Here the compounding is daily. We need to find the effective annual rate (EAR) first and then solve ...

Q: Economic Profit (or Economic Value Added) is created

A: Economic profit shows the difference between the revenue generated from outputs after meeting all th...

Q: n bought a lot worth ₱1,000,000 if paid in cash. On the installment basis, he paid a down payment of...

A: The loan payment are done based on the interest rate and period of the loan and present value of pay...

Q: Is stock with Increasing dividend yield and decreasing market price per share a good stock to invest...

A: Dividend yield is the amount of money given to shareholders for owning a share of a company's stock ...

Q: 13. The following information relates to two companies   Alpha plc Beta plc Profit after tax £2...

A: Business valuation is used to find out what economic value the owner gets from investing in the said...

Q: define if operating, investing or financing expense Increase in Bonds Payable A decrease in the cur...

A: Statement of cash flows is one of the financial statement which shows all cash inflows and cash outf...

Q: Can you help me with this please? Katrina purchased a dining room set for $1500 down with the balanc...

A: Monthly payment (P) = $198.12 Interest rate = 12% Monthly interest rate (r) = 12%/12 = 1% Total mont...

Q: Assumes stock markets are both deep (many buyers and sellers) and liquid (easy to buy or sell). As s...

A: Stock market is the marketplace where stocks are bought and sold by traders. The volatility of the s...

Q: has accumulated $6200 by saving $116 every month for four years, what nominal annual rate of interes...

A: The amount deposited in account grow to large amount after deposits are made for long time with effe...

Q: Calculate the nominal rate for each of the following general ordinary annuities given the present or...

A: The present and future value of an annuity: When a fixed sum of money is received or paid at constan...

Q: 1. Three mutually exclusive investment alternatives are being considered. The estimated cash flows f...

A: Mutually Exclusive Projects : It is the concept capital budgeting process that  a single project out...

Q: a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. Wha...

A: A bond is defined as the financial instrument that is used to raise capital from the market at a sta...

Q: A bond has a $1,000 par value, 22 years to maturity, and a 7.00% annual coupon and sells for $875. W...

A: Yield to Maturity (YTM) = Coupon Payment + (Face Value - Market Value)/Years to Maturity/Face Value ...

Q: For the following annuity due, determine the nominal annual rate of interest. Future Periodic Rent P...

A: Solution:- When an equal amount is paid at the beginning of each period, it is called annuity due. T...

Q: he following are necessary for a lease alid, except:

A: Lease is type of finance in which right to use is given for given specified period and client has au...

Q: four-year lease agreement requires payments of $20,000 at the beginning of every year. If the intere...

A: Present Value  The present value is the value of cash flow stream or the fixed lump sum amount at ti...

Q: Please explain why at a 5% continuous interest rate, it takes the same amount of time for $2000 to d...

A: Time value of money (TVM) is used to measure the value of money at different point of time in the fu...

Q: A construction company agreed to lease payments of $571.08 on construction equipment to be made at t...

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first t...

Q: What cash payment is equivalent to making payments of $1471.00 at the end of every year for 8 years ...

A: Solution:- When an equal amount is paid at end of each period, it is called as ordinary annuity. Now...

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.