The preferred stock of North Coast Shoreline pays an annual diide sells for $20.24 a share. What is the rate of return on this security? OA 5.95 percent OB. 7.08 percent OC.8.40 percent OD 11.90 percent OE 14.17 percent dend of
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- Q2 - Returns on stocks X and Y are listed below: Period 1 2 3 4 5 6 7Stock X 4% -2% 5% -1% 10% 7% 12%Stock Y -3% 7% 4% 2% 2% 8% -3% Consider a portfolio of 10% stock X and 90% stock Y. What is the mean of portfolio returns? Please specify your answer in decimal terms and round your answer to the nearest thousandth (e.g., enter 12.3 percent as 0.123).A company is considering implementing a project that generates a guaranteed income of 1000 from next year and every year thereafter, while the project has an investment cost of 10,000 today. In addition, there is a one-off maintenance cost of 20 000 in exactly 10 years time. Assume that the risk-free interest rate is 3 percent. Is the project profitable to implement?The table below shows information for 3 stocks. Security Beta Risk-free rate Expected market return Stock 1 1.9 0.02 0.09 Stock 2 1.2 0.035 0.09 Stock 3 0.2 0.015 0.09 The risk-free rates are different because they were measured in different years. Calculate the expected (or required) return for each stock, using the Capital Asset Pricing Model (CAPM). What is the required return for stock 1? What is the required return for stock 2? What is the required return for stock 3?
- Microsoft has the opportunity to purchase a new factory today that will provide them with a $50 million return four years from now. If prevailing interest rates are 6 percent, what is the maximum that the project can cost for Microsoft to be willing to undertake the project? a. $53,406,002 b. $39,604,682 c. $43,456,838 d. $50,000,000 e. $34,583,902 D DOnly typed answer Assume the correlation of returns between KO and the market portfolio equals 0.80, the standard deviation of KO equals 0.60, and the standard deviation for the market portfolio equals 0.30. What is the beta for KO.You observe the E[IBM] = 8%, E[AAPL] = 12%, B(AAPL)=B(IBM)+2/3, Risk-free rate is 4%. What is the expected return on the market portfolio assuming the CAPM is true.
- Curtis invests $600,000 in a city of Athens bond that pays 8.25 percent interest. Alternatively, Curtis could have invested the $600,000 in a bond recently issued by Initech, Incorporated that pays 11.00 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. How much explicit tax would Curtis incur on interest earned on the Initech, Incorporated bond? Multiple Choice $50,560.00 $15,840.00 $11,880.00 $36,920.00 None of the choices are correct.Given the attached information: Estimate the betas for Blandy and Gourmange companies? If you have a portfolio of 25% Blandy and 75% Gourmange, what is the beta for your portfolio?33 TB MC Qu. 12-82 A stock had annual returns of... A stock had annual returns of 5.5 percent, -12 percent, and 15.5 percent for the past thr of returns for this stock? 56.65% 6.94% 1.94%
- In a financial market a stock is traded with a current price of 50. Next period the price of the stock can either go up with 30 per cent or go down with 25 per cent. Risk-free debt is available with an interest rate of 8 per cent. Also traded are European options on the stock with an exercise price of 45 and a time to maturity of 1, i.e. they mature next period. Find prices of Arrow-Debreu securities.You are financial analyst for the XYZ company. The director has asked you to analyze two proposed capital investments, Project A and Project B. Each project has a cost of RM 10, 000, and the cost of capital for each project is 12 percent. The project s’ cash flows are as follows: Year Expected Net Cash Flows Project A Project B 0 (10,000) (10,000) 1 6500 3500 2 3000 3500 3 3000 3500 4 1000 3500 Calculate each project’s NPV. Which project or projects should be accepted?A project has an initial cost of $26,000, a discount rate of 11.7 percent, a life of 5 years, and an NPV of $11,216. Given this, you know that the project is expected to earn a return: A equal to 11.7 percent of $26,000 plus an additional $11,216. B of $11,216 in total. C equal to 11.7 percent of $37,216 (= $26,000 + 11,216). D of 11.7 percent of $11,216. E of $26,000 minus $11,216.
