Stock A has expected return of 15% and standard deviation (s.d.) 20%.  Stock  B  has  expected  return  20%  and  s.d.  15%.  The  two  stocks  have  a  correlation coefficient of 0.5.  a. Note that Stock A has greater risk (s.d.) that Stock B, but a lower expected return. Explain how is this possible in a world where returns on assets are as predicted by the CAPM.        The beta of stock A is 1 and the beta of stock B is 1.5. What is the risk premium on the market portfolio, if the CAPM holds ?

Q: Given the beta is a relative measure of systematic risk, it is reasonable to assume that there…

A: Systematic risk cannot be diversified and is correlated with that of the market portfolio. All…

Q: Pablo Company is considering buying a machine that will yield income of $3,300 and net cash flow of…

A: Net present value is one of the most common methods used in capital budgeting to analyze the…

Q: 1. Computer the amount to be financed considering that you have saved $1500 for a down payment. 2.…

A: Loan Payment: It represents the payments made by the borrower to the lender for amortizing the loan…

Q: low Oil issued 140,000 shares of stock last week, received $23.15 per share, and incurred direct…

A: Flotation costs are spent when a publicly traded corporation issues new securities.

Q: Tokyo Corporation purchases P1,500 in raw material each month to support sales of P2,500 that occur…

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: isation schedule for a filling station. an will be paid off in 15 years. hOutstanding principal at…

A: Effective interest rate is interest rate considering the impact of compounding on interest rate on…

Q: Table below shown information about a two activity network. The project overhead costs are Rs. 400…

A: Crashing deals with the effect of increase or decrease in the total duration for the completion of a…

Q: a. Draw the cashflow diagram b. How much will the company have to set aside in year 4 to have the…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: A payment of $23,000 is due today. What three equal payments, one in 2 years, one in 4 years, and…

A: Given That: P.V=$23000 Payment is done in 3 equal payment Rate of interest= 4.25% Duration= 6 years…

Q: At ABC Co., 10% of each salesperson's yearly bonus is based on whether or not the entire company…

A: Point A - Compensation policies must be legal means that the policy should follow the rules and laws…

Q: An effective method to recover water used for regeneration of ion exchange resins is to use a…

A: Answer -  Putting in Equation,    −(920+360)(A/P,10%,5) – 1.28x,3 )– 3.10x = −3850(A/P,10%,5) –…

Q: Describe how adding a risk-free security to modern portfolio theory allows investors to do better…

A: A group of investment portfolios that are projected to produce the maximum returns at a given degree…

Q: to

A: COVID 19 CRISIS - Most people infected with the virus will experience mild to moderate  illness and…

Q: Steve deposits a certain amount of money into her savings account at the beginning of each quarter…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: What is the compound amount of Php 20,000 for 10 years plus Php 15,000 for 8 years plus Php 1000 for…

A: Here we will use the concept of time value of money. As per the concept of time value of money the…

Q: State one negative and one positive impact of interest on personal finances

A: Personal finance connotes to the planning and the administration of personal financial activities…

Q: Question 2 of 43 Fill in the blanks La Pagayo Corporation commenced business operations in calendar…

A: Income tax payable is higher  of Normal Corporate Income Tax (NCIT) and Minimum Corporate Income Tax…

Q: Tokyo Corporation must pay one of its suppliers P765,000. The bank requires a 15 percent…

A: Banks and financial organizations often lend money to various businesses, clients, and investors in…

Q: How much money should you deposit every year in your savings account starting 3 years from now at 7…

A: Given: Particulars Amount Future value (FV) 8000 Years 3 Ending deposit 10 Interest rate…

Q: The owner of Supreme Fitness has requested your assistance as financial manager in advising on the…

A: A financial manager is someone who is responsible for all of an organization's main financial…

Q: Assume that Major Manuscripts, Inc. is currently operating at 95 percent of capacity and that sales…

A: The process of creating, executing, and managing a budget is known as budgeting. Budget planning and…

Q: Which of the following are all correct financial characte fitability, growth profile, and end…

A: Companies are to be compared based on the some characteristic so that it is better to select the…

Q: Given that the NPV per share of the reinvestment of the retained earnings next year for a firm is…

A: Here, NPV per Share is $2.50 Growth Rate is 5% Required Return is 12%

Q: D4) Please explain why liquidity ratios, profitability ratios, and efficiency ratios are important…

A: Ratio are very important indicators of performance of sector and company and give good comparison of…

Q: a.  ​Manhattan's native tribe sold Manhattan Island to Peter Minuit for ​$   24 in 1626. ​ Now,…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Zietlow Corporation has 2.1 million shares of common stock outstanding with a book value per share…

A: The weighted average cost of capital is the discount rate used to evaluate a project which is…

Q: What is the size of the final payment of money is borrowed at 6% Compounded semi annually?

A: Loan payment: These are periodic payments made by the borrower to the lender for the amount of…

Q: Aging of receivable is used when determining how long it takes a company to collect its account…

A: Financial management not only deals with managing long term assets or projects, but it also focuses…

Q: Innovation Company is thinking about marketing a new software product. Upfront costs to market and…

A: Here, Initial Investment is $4.98 million Annual Profit for 10 years is $1.15 million Annual Cost…

Q: Haswell Enterprises' bonds have a 10-year maturity, a 6.25% semiannual coupon, and a par value of…

A: Data given: Par value = $1000 N= 10 year Coupon= 6.25% (semiannual) Interest rate =10.5% (semi…

Q: What is the logic behind the concept of time value of money, and what comes to your mind once as…

A: It means money has time value. A dollar today is more valuable  than a dollar a year hence. Rate of…

Q: s. How much is his monthly payment? How much total interest will he pay?

A: Loan payments: These are payments made by the borrower to the lender for amortizing the loan…

Q: Winston Company had two products code named X and Y. The firm had the following budget for August:…

A: we will apply the formula for calculating the price variance. We will calculate the per-unit price…

Q: Chris bought a house for 325,000 in May of last year. At the time of purchase he put a down payment…

A:

Q: pay 7% compounded. If she makes pa of each quarter, what must Elena's payments to be achieve her…

A: Future Value of Annuity: It represents the future worth of the present annuity payments and is…

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery…

A: (Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: In most lending organisations, credit losses occur due to lack of credit risk monitoring. You’re…

A: Credit risk is referred as the possibility of the loss, which used to result in the failure of the…

Q: A payment of $2,690 was due two years ago, and a payment of $1,650 is due today. What single payment…

A: This question can be solved in light of time value of money and future value. The formula to…

Q: What is the present value of a perpetual stream of cash flows that pays ​$   7,500 at the end of…

A: Year one cash flow = $7500 Growth rate = 0.02 Discount rate = 0.09 Discount rate = 0.07     Present…

Q: The effective interest rate over this period equals ...

A: Effective Interest Rate: It refers to the annual rate of interest which takes into account the…

Q: 13:27 46 اس < HW5- Ch11 简答题 1. Consider the following two projects: Year 0 Year 1 Year 2 Year 3 Year…

A: Payback period is the length of time required to recover the cost of Investment. It is ccalculated…

Q: oday's foreign quotation. Below are the following quotes: - 100 JPY/USD 1.60 USD/GBP 140 JPY/GBP…

A: The arbitrage profit is due to mispricing in the market and is short term profit by buying one…

Q: From page 9-3 of the VLN, when determining the issue price of a bond, which interest rate would you…

A: Bonds: Bonds are debt instruments that are used by corporations to raise funds.  Since bonds are…

Q: Suppose a company in the E-commerce industry is expected to pay a dividend of $0.28 per share wit…

A: Present value of growth opportunity is present value of growth opportunity considering interest and…

Q: Calculate the monthly finance charge for the credit card transaction. Assume that it takes 10 days…

A: Credit card firms look at the balance a client carries each day of the billing cycle to calculate…

Q: Some recent financial statements for Smolira Golf Corporation follow.   SMOLIRA GOLF CORPORATION…

A: The question is related to Ratio Analysis. The Price Earnings Ratio is calculated by dividing Market…

Q: A fixed interest investment is growing at 2.9% per year. Its current value is $3500. a.) What will…

A: The concept of the time value of money states that the same amount of money has more value today…

Q: Assume you expect to earn 12% annually on your investment account. You already have $33,556.25 in…

A: The present value of a future cash flow is computed by dividing it by a discount factor that takes…

Q: 12 year $1000 bond pays 9% interest. The maturity on a comparable risk bond is 6%. Current price of…

A: Solution:- Yield to maturity means the rate of return earned by the bond holder, if he holds the…

Q: Question content area top Part 1 ​(Present value of complex cash​ flows)  You have an opportunity to…

A: The discount rate of zero percent means that the value of a dollar will remain the same in the…