Who first developed portfolio theory?   Multiple Choice:   A) Richard Brealey B) Franco Modigliani C) Harry Markowitz D) Merton Miller

Q: Which is TRUE OR FALSE? I. Assets do not remove money from your pocket. II. Sponsorships are…

A: Assets are the resources owned by the business that helps the business in generating cash flow and…

Q: 4. In a CDS the accrual payment is a payment made by CDS and occurs when the to CDS defaults a.…

A: Buyer of a CDS makes periodic payments to the CDS seller to make good loss from the default risk by…

Q: Projects A and B are mutually exclusive. If project A, the larger project, has an approximate ERR of…

A: The economic rate of return (ERR) is a rate of return being used in capital budgeting to monitor and…

Q: Year Investment Cash Inflow $13,000 $10,000 $1,000 $2,000 $2,500 $4,000 $5,000 $4,000 $5,000 $4,000…

A: Payback period = initiative investment/Annual cash inflows Here cash inflows per year is not…

Q: A tractor was purchased for $74486 and at the bank interest rate of 4.67% per year. The residual…

A: Compound interest is interest charged on a loan or deposit. It is the most widely utilized idea in…

Q: A fixed capital investment of P10,000,000 is required for a proposed manufacturing plant and an…

A: Fixed capital (F) = P 10,000,000 Working capital (W) = P 2,000,000 Depreciation (D) = 10% of F = P…

Q: Fund X Return % Fund Y Return% 15 8 24 11 -3 6 5 9 5 20 -2 6 -2 14 7 13 12 4. Make a decision table…

A: 4. Data given: Fund X   Year (n)  Return %  (X) 1 15 2 24 3 -3 4 5 5 20 6 -2 7 13…

Q: If the risk-free rate is 2.2 percent, the inflation rate is 1.9 percent, and the market rate of…

A: The risk premium on the U.S. Treasury bond will be zero as it is backed by US government and as…

Q: Ritter Sports Industries has preferred stock outstanding with a par value of $100. The stock pays a…

A: Par value of the stock = $100 Quarterly dividend = $0.95 Current price = $71.25 Nominal rate of…

Q: A 25-year coupon bond pays an annual coupon of 5 and has a face value of 100. If the current price…

A: Annual Interest = 5% FV = Face Value of the Bond = 100 Price = Current Market Price = 100 Maturity =…

Q: Loras College’s bond is currently trading at a spread of 55.2 basis points to Treasuries and the…

A: Spread of bond tells that how much yield on bond is above the benchmark yield that yield on treasury…

Q: Assume the following data for a stock: Beta = 1.5; risk-free rate = 4 percent; market rate of return…

A: Beta (b) = 1.5 Risk free rate (Rf) = 0.04 Market rate of return (Rm) = 0.12 Fair return = ? Expected…

Q: Determine the rate of return for the cash flows show with two trials with 5% and 10% interest rates)…

A: Rate of return can be determined from interpolation or doing trial and error methods both are useful…

Q: Silver Company purchased a 2,000,000 ordinary life insurance policy on its president and the company…

A: The cost of obtaining an insurance contract, as well as any outstanding monthly premium charges on…

Q: Financial markets are important because A. It gives investors equal footing with debtors B. Capital…

A: The answer is option A. Financial markets are important because it gives investors equal footing…

Q: Suppose that the CAPM holds and that BP’s stock has a beta of 2. the required rate of return on BP…

A: Stocks refer to the concept which denotes the security that represents the holder's ownership in the…

Q: Which is a key difference a manager should note in choosing between forward and futures contracts?…

A: a. Exchange trading occurs in the case of futures contracts. Therefore, futures contract are more…

Q: The invoice date for a bill is April 14 with the terms 2/15 ROG. If the goods were received on June…

A: Discount date: April 29 Due Date: May 19

Q: For an 11-year, $1,000 par value, 5.08% semiannual-pay bond currently trading at $921.41, calculate…

A: Modified duration helps in determining the price change in the bond for 1% change in interest rate.…

Q: .A bank offers a 272- day discounted loan at a simple discount rate of 12%. (a) How much money would…

A: The discount on loan is given and that discount on loan is the interest being charged on the loan…

Q: 13. A discounted loan of $3,000 at a simple discount rate of 6.5% is offered to Mr. Jones. If the…

A: 1. Interest amount = (face Value - amount received = 3000 - 2869.11 = $130.89) 2. Time when the…

Q: Suppose Bank is trading share at 17$ today. The company pays dividend of 0.25. The analysts claimed…

A: Expected return = (Target Price - Current price + dividend) / Current price

Q: List the business, technological, and organizational challenges that were addressed throughout the…

A: Management is the administration of a company, a non-profit organisation, or a government agency.…

Q: Differentiate between Closed-End and Open-End funds.

A: Various options are available for investment through different channels. On the basis of different…

Q: Calculate the nominal and real return as well as the nominal and real risk premiums for the…

A: Real rate of return is the net return to the investor after adjustment of inflation.   Return on…

Q: 3) When firms increase their debt-equity ratio, we find: Group of answer choices The ROE always…

A: We know that debt is the cheaper source of finance, if any company uses more debts in capital…

Q: Larry wants to make a decision on a six- year amortized loan for him to buy a new car. The value of…

A: It will be enough for Larry to agree on this contract, if the present value of monthly payment of…

Q: Art purchase a house and lot worth ₱1,410,000, he made a down payment of ₱150, 000 and the remaining…

A: A home loan taken from a bank or a financial institution is termed as mortgage. The home and the…

Q: an engineer planning for retirement settles on a P87,000 annual income ext 20 years, with the first…

A: There is need of proper planning for retirement and if you do on properly than you would enjoy good…

Q: In how many years will it take P18,000 accumulate t P20,000 when deposited in a savings account that…

A: Answer -  Compound interest formula -  A = P (1+ r/n)nt Given, A = 20000 P = 18000 r = 0.25%…

Q: XYZ just went public. As a growing firm, it is not expected to pay a dividend for the first five…

A: Price of stock may be calculated using dividend discount method with following formula   Present…

Q: Fatima buys an 11-year, $314,530, a zero-coupon bond with an annual YTM of 1.74%. If she sells the…

A: Zero coupon bond will not pay any coupon throughout its life, hence the present value of the bond…

Q: Extract of statement of Income and Expenditure for the Financial Years Ended 31 August 2020   2020…

A: Net asset value per unit share (NAV per unit share) Net asset value is total assets less total…

Q: From the given information find the Cash Flow From the Asset. Operating Cash Flow 775 Net Change in…

A: Cash flow from asset = cash flow from operation + changes in working capital + changes in fixed…

Q: A friend of yours tells you she holds an American call option that is very deep- in-the-money. She…

A: Deep in the money is an option where the exercise price is significantly lower than the current…

Q: Technique commonly used when an uncertain single factor determines the selection of an altenative of…

A: Alternative Analysis: An alternative analysis is a comparison of the numerous paths that can be…

Q: Time value Peter just got his driver’s license, and he wants to buy a new sports car for $70,000. He…

A: Future Value refers to the value of the current asset or investment or of cash flows at a specified…

Q: Explain the differences between depreciation expense and impairment loss of property, plant and…

A: The difference between Depreciation and impairment is as follows: Depreciation Impairment It is…

Q: Please critically evaluate and discuss in detail how a deferred tax provision can arise under IAS…

A: Typically, publicly listed corporations are held to high standards. Small and midsized enterprises…

Q: Suppose we have a project with the following cash flows: Outgoing: P150,000 at t = 0, P250,000 at t…

A: IRR may be calculated using the following excel formula

Q: Comparing labor productivity , suppose the United States has an absolute advantage over Costa Rica…

A: A country should take competitive advantage of the items in which it is specialized by exporting…

Q: Mr Price, has no debt outstanding and a total market value of R150,000. Earnings before interest and…

A: Earnings per share(EPS) refers to an indicator or a financial ratio that shows how much a company is…

Q: Which of the following is true?   A.Forward contract buyers and sellers do not know who the…

A: Forward and futures contracts are derivatives agreements in which two parties associate to acquire…

Q: The current exchange rate between the Japanese yen and the U.S. dollar is ¥90 per dollar. If the…

A: The exchange rate is the rate at which one currency can be bought for another. Depreciation of a…

Q: Debt payments of $1,650 and $2,400 are due in five months and nine months, respectively. What single…

A: Payment in five months (m5) = $1,650 Period of first payment (t1) = 5 months Payment in nine months…

Q: The following information is available on two mutually exclusive projects. All numbers are in ‘000s.…

A: NPV Method: Working in '000s and calculation are done in excel so there is no intermediate rounding:…

Q: Which form of receivables financing is least complex?

A: factoring  is a form of receivables and debtor finance

Q: 6. Find the amount at the end of 15 years if P 55 000 is invested at an interest rate of 5%…

A: Initial investment = 55,000 Semiannual interest rate for first 10 years (r1) = 0.025 (i.e. 0.05 / 2)…

Q: Chango Industries has decided to borrow $50,000,000.00 for six months. To reduce the company’s…

A: Interest rate swap Under Interest rate swap, one party pays fixed interest rate while another party…

Q: You need $30000 in cash to buy a car 15 years from today. You expect to earn 14 percent, compounded…

A: Future value is important to both investors and financial planners because it helps them to predict…

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.