State of the Economy Deep recession Mild recession Average Mild boom Strong boom Probability 0.05 0.25 0.35 0.20 0.15 Company A -20% 0 10 15 30 Company B -40% 10 0 25 30
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From the table given, how can I compute 1. the covariance of returns and 2. the correlation between Company A and B? Thanks!
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- Q6 Compute the expected return given these three economic states, their likelihoods, and the potential returns: (Round your answer to 1 decimal place.) Economic State Probability Return Fast growth 0.3 40 % Slow growth 0.4 10 Recession 0.3 –25 EXPECTED RETURN %Given the expected returns and probabilities of various states of the world in this table, what is the expected return for Carbide Company?Carbide CompanyState of the EconomyProbability of StateReturn on StateBoom.3018%Steady.5513%Recession.15-5%Use the information from this table to find the standard deviation for each asset. State of Economy Probability of State Return on Asset J Return on Asset K Boom 30% 5% 24% Growth 40% 5% 12% Stagnant 20% 5% 4% Recession 10% 5% -10%
- Use the information from this table to find the expected return for each asset. State of Economy Probability of State Return on Asset J Return on Asset K Boom 30% 5% 24% Growth 40% 5% 12% Stagnant 20% 5% 4% Recession 10% 5% -10%1. Solve for Return of Risk Free Asset and its average Year Risk free rate (%) Inflation (%) Return risk-free asset 2011 4.51 3.00 ??? 2012 3.11 2.20 ??? 2013 2.61 2.70 ??? 2014 2.75 1.70 ??? 2015 2.34 1.70 ??? 2016 1.78 1.50 ??? 2017 1.77 1.90 ??? 2018 2.02 1.80 ??? 2019 0.90 1.80 ??? 2020 0.02 0.90 ??? Average 2.18% ??? 2. Assuming the following: Average Return (Risky Portfolio) 3.86% Standard Dev (Risky Portfolio) 10.56% Average Risk Free Rate 2.18% Return on Risk Free Asset Avg ??? Using the formula: E(rc)=rf + y* (E(rp) - rf) Solve for: 1. % of Risky Assets (y): 2. % of Risk Free Assets (1-y): Note: You wish to generate a 7% return for your complete portfolio E(rc)Given W=180 b=0.75 G=90 Tax=90 NX=-50 I=300-10r Central bank reserves are Gold=100 f. currencies 200 l.currencies 150 t-bills 500 RRR=0.2 MD=5000-50r Calculate the equilibrium GDP (y). If Ypot=1700 by how much should the central bank change the RRR to attain potential If instead the central bank will involves open market operations in order to attain potential. By how much should it increase or decrease t-bills.
- Year Net Cash Flow Discount Factor Present Value (using the factor) Present Value (using Excel formula) 0 $ (3,500,000.00) 1 $ (3,500,000.00) ($3,500,000.00) 1 $ 900,000.00 0.90909 $ 818,181.00 $818,181.82 2 $ 900,000.00 0.82645 $ 743,805.00 $743,801.65 3 $ 900,000.00 0.75131 $ 676,179.00 $676,183.32 4 $ 900,000.00 0.68301 $ 614,709.00 $614,712.11 5 $ 900,000.00 0.62092 $ 558,828.00 $558,829.19 Net Present Value $ (88,298.00) $ (88,291.91) 3. Now assume that inflation is estimated as a 5% increase each year (starting with Year 1) for the entire 5 years. Calculate the new net cash flow values for each year. start with 5% increase for Year 1 net cash flow. Year Net Cash Flow 0 $…sh10 please helm me Yhankyou As of 2020, the largest expansion of the Fed’s balance peaked in what year?Return on Capital Employed (ROCE) = For Riccarton PLC: ROCE = 50000/380000 X 100 = 13.2% For Edinburgh PLC: ROCE = 45000/230000 X 100 = 19.6% Current Ratio = Current assets/current liabilities For Riccarton PLC: Current ratio = 150/120 = 1.25 For Edinburgh PLC: Current ratio = 80/70 = 1.14 Gearing Ratio = (long term borrowing + short term borrowings) / equity For Riccarton PLC: Gearing ratio = (180 + 100)/200 = 1.4 For Edinburgh PLC: Gearing ratio = (100 + 50)/130 = 1.15 Price/Earnings (P/E) Ratio = Share price / earnings per share For Riccarton PLC: P/E Ratio = 195/35 =5.57 For Edinburgh PLC: P/E Ratio = 451/28 = 16.107 Based on the above ratios explain, which company George H. and James W. should invest in. You should also briefly discuss the limitations of your analysis.
- Qw.02. Compute trend percents for the following accounts using 2020 as the base year. For each of the three accounts, state whether the situation as revealed by the trend percents appears to be favourable or unfavourable Sales Cost of goods sold Accounts receivable Numerator: 2024: 2023: Numerator: 2024 $ 463,414 234,107 22,522 2024: 2023: 2022: 2021: 2020: Is the trend percent for Net Sales favourable or unfavourable? Numerator: I 1 1 1 Trend Percent for Net Sales: 2023 $ 306,897 155,099 17,861 1 1 1 I 1 2022 2021 $ 249,510 $ 175,095 128,255 89,348 10,226 17,042 Trend Percent for Cost of Goods Sold: Denominator: 2024: 2023: 2022: 2021: 2020: Is the trend percent for Cost of Goods Sold favourable or unfavourable? 7 Denominator: 7 1 Trend Percent for Accounts Receivable: Denominator: 2022: 2021: 2020: Is the trend percent for Accounts Receivable favourable or unfavourable? = E # = S U = E = = 2020 $ 129,700 64,850 8,871 Trend percent Trend percent Trend percent 1% %6 % % % % 196 196 56…470 - 35 you have concluded that the following relationships are possible next year: economic status probability rate of return weak economy .15 -5% static economy .6 5% strong economy .25 15% What is the standard deviation of the rate of return for the one year period? a. .65 % b. 1.45% c. 4% d. 6.25% e. 6.4%INV3 P6a You are interested in determining the intrinsic value of Hoffman Inc. Your analysis shows that the firm’s growth rate will drop from its current pace by 20% each of the next two years, and then you estimate that dividends will continue to grow at the year 2 rate, with the same dividend policy in place, indefinitely. Lastly, your estimate of the required return on the firm’s equity is 12%. Hoffman’s recently published annual report shows the following financial relationships: Assets = 1.4 x Equity Current Assets = 1.7 x Current Liabilities Sales = 1.5 x Assets Net Income = 8% x Sales Dividends = 30% x Net Income Earnings per share (Basic) = $0.80 per share Determine the growth rate of the company for the prior and for each of the next two years.