Using Mean-Variance analysis, how do you suggest an alternative portfolio (either a portfolio with the same mean but lower risk or a portfolio with same risk but a higher mean.). What Excel formulas do you use to do this?

Prepare a short discussion of each calculated ratio, which you believe may be unsatisfactory, and explain why.

1. There are many risks on the way to achieving financial independence. One such factor that affects retirement planning is a shortened work life expectancy due to untimely death, disability, health and/or unemployment. Which of the following is NOT a recommended way to mitigate this risk?

a. Obtaining insurance

b. Education

c. Training

d. Adequate capital accumulation

2. True or False: Two of the more important factors affecting retirement planning are the savings amount and the growth of GDP.

a. True

b. False

23. As an active equity manager you must deliver competitive relative performance on a consistent basis in order to attract and keep clients. In order to deliver that performance, you must structure your portfolio and make decisions to take advantage of several factors. What are those factors and why are they important?

22. If I were to provide you with five years of monthly returns for a particular mutual fund (60 return observations), how would you go about identifying the style of that mutual fund?

You are valuing Soda City Inc. It has $139 million of debt, $74 million of cash, and 189 million shares outstanding. You estimate its cost of capital is 9.1%. You forecast that it will generate revenues of $731 million and $769 million over the next two years. Projected operating profit margin is 36%, tax rate is 22%, reinvestment rate is 51%, and terminal exit value multiple at the end of year 2 is 10. What is your estimate of its share price? Round to one decimal place. ​[Hint: Compute projected FCFF for years 1 and 2 based on info provided, compute terminal value using the exit multiple method, discount it all to find EV, walk the bridge to Equity, divide by number of shares outstanding.]

Give your experience with managers in the past, what problems do you see for managers who let employees decide for themselves the best way to do things and give them the power to obtain needed equipment?

47.         (BONUS) Suppose that Disney wants to follow up on the success of Frozen, with a sequeal this fall. The movie will cost $165 million to produce (INVESTED TODAY), and the producers expect the movie to generate a cash flow of $160 million in the first year. After the first year, cash flows will decline to $15 million in year 2.

However, the movie will also create synergy within the company.

Disney will build a new Olaf ride at Epcot for $40 million (invested TODAY). Disney suspects that the ride will bring visitors to the park and increase merchandise sales. Disney estimates that sales will increase by $12 million per year in PERPETUITY. The after-tax operating margin on these sales is 50% for Disney. If the cost of capital is 10%, what is the combined NPV of this opportunity?

You work for a California textbook company. Henry is auctioning off the rights to his online textbooks sales in Switzerland, which are expected to bring in the following EUR cash flows over the next three years:

                                       Year 1 Year 2 Year 3

EUR Cash Flows 1,000 1,100 1,200

To prepare your bid, you need to calculate the net present value (NPV) of these cash flows in USD terms. You believe that relative PPP is a reasonable tool to use.

The spot exchange rate is 1.20 USD per EUR. Expected US inflation is 2%, and expected inflation in Switzerland is 1%. Your USD discount rate is 9%.

The NPV of these cash flows in USD is: ????

You have a Brazilian partner, who ask for your estimates of the net present value of the EUR cash flows in Brazilian real (BRL) terms.

He asks you to convert the cash flows into BRL (using relative PPP), and to use a BRL discount rate of 25%.

The spot exchange rate is 4 BRL per USD. Expected BRL inflation is 12%. All other information is the same as above.

The NPV of these cash flows in BRL terms is: ????

3. A financial institution has the following assets (market values):

$120 million in cash reserves,

$120 million in Treasury bills and notes,

$200 million in mortgage loans,

$40 million in corporate bonds, and

$150 million in commercial loans.

If assets are liquidated on short notice, the institution expects to receive

99% of the fair market value of the treasury debt,

90% of the fair market value of the mortgages,

95% of the fair market value of the bonds, and

$75% of the fair market value of the commercial loans.

What is the financial institution’s liquidity index?