Consider the following stock information about Tencent and HSBC

a. What’re the expected return on each stock?
b. What’re the standard deviation on each stock?
c. The risk free rate is 1.5%. Based on the CAPM, If Tencent’s market beta is 1.5, what’s the beta of HSBC?
d. If you invested 65 percent in Tencent and 35 percent in HSBC, what is your portfolio expected return? The standard deviation?
e. Given the portfolio information in (d) and beta information in (c), what is the portfolio’s market beta?

Parker & Stone, Inc., is considering a new project that requires an initial fixed asset investment of 1.2 million. The project also requires an initial investment in net working capital of $250,000. The project is expected to generate $950,000 in sales and cost $400,000 every year for three years. The fixed asset follows a straight-line depreciation. After three years, the fixed asset has a zero book value but is estimated to have a market value of $200,000, and the net working capital will fully recovery. The corporate tax rate is 35%.

a. What are the operating cash flows in each year?
b. What are the cash flows from net working capital and the net capital spending in year 3?
c. What are the CFFA in each year?
d. If the required return is 10% for a similar risk level of project, should the company implement this project?

If markets are efficient a random walk explain stock returns. Why?

How does the random walk in stock prices make finance into a science (according to my lecture)?

Explain the disposition effect

Explain the idea of nudging. Then give and explain a few (3 examples) of nudging.

Why did the efficient markets hypothesis collapse ?

What are the consequences of teaching students that markets are efficient when they are likely not? Think hard about this question.

Tabitha saved $5,000 a year for ten years ($50,000) beginning at age 22 Tonya saved $10,000 a year for ten years ($100,000) beginning at age 40 Both made the same investments and realized a compound return of 6% annually Who has more money at age 67?

28) A commercial bank must demonstrate abilities to manage its credit and interest rate risk to its shareholders and regulators. Describe fully two (2) ways banks can use to analyze and minimize each:

•  Credit Risk

•  Interest Rate Risk

Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 10%.

What is Project A's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

What is Project B's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

A bond pays annual interest. Its coupon rate is 9%. Its value at maturity is $1,000. It matures in 4 years. Its yield to maturity (YTM) is currently 6%.

a. Calculate the Macaulay's duration.

b. Calculate the modified duration

c. Calculate the percentage change in bond price if YTM increases by 1%

A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows:

1. Calculate NPV for each project. Do not round intermediate calculations. Round your answers to the nearest cent.

   Project M:    $  

   Project N:    $  

   Calculate IRR for each project. Do not round intermediate calculations. Round your answers to two decimal places.

   Project M:     %

   Project N:     %

   Calculate MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places.

   Project M:     %

   Project N:     %

   Calculate payback for each project. Do not round intermediate calculations. Round your answers to two decimal places.

   Project M:     years

   Project N:     years

   Calculate discounted payback for each project. Do not round intermediate calculations. Round your answers to two decimal places.

   Project M:     years

   Project N:     years

2. Assuming the projects are independent, which one(s) would you recommend?

   1. Only Project M would be accepted because NPV(M) > NPV(N).

   2. Only Project N would be accepted because NPV(N) > NPV(M).

   3. Both projects would be accepted since both of their NPV's are positive.

   4. Only Project M would be accepted because IRR(M) > IRR(N).

   5. Both projects would be rejected since both of their NPV's are negative.

3. If the projects are mutually exclusive, which would you recommend?

   1. If the projects are mutually exclusive, the project with the highest positive NPV is chosen.

   2. Accept Project N.If the projects are mutually exclusive, the project with the highest positive IRR is chosen.

   3. Accept Project M.If the projects are mutually exclusive, the project with the highest positive MIRR is chosen.

   4. Accept Project M.If the projects are mutually exclusive, the project with the shortest Payback Period is chosen.

   5. Accept Project M.If the projects are mutually exclusive, the project with the highest positive IRR is chosen. Accept Project N.

4. Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?

   1. The conflict between NPV and IRR is due to the fact that the cash flows are in the form of an annuity.

   2. The conflict between NPV and IRR is due to the difference in the timing of the cash flows.

   3. There is no conflict between NPV and IRR.

   4. The conflict between NPV and IRR occurs due to the difference in the size of the projects.

   5. The conflict between NPV and IRR is due to the relatively high discount rate.

Compare the hypothetical long-term return on a traditional IRA vs. a Roth IRA. This will require you to make assumptions about changes in your tax bracket over the period you are saving. Create a scenario that you consider realistic.

You have been asked to forecast the additional funds needed (AFN) for Houston, Hargrove, & Worthington (HHW), which is planning its operation for the coming year. The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm's investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.

Which answer choice is correct?