Consider a mutual fund with $219 million in assets at the start of the year and with 12 million shares outstanding. The fund invests in a portfolio of stocks that provides dividend income at the end of the year of $6 million. The stocks included in the fund's portfolio increase in price by 7%, but no securities are sold, and there are no capital gains distributions. The fund charges 12b-1 fees of 0.50%, which are deducted from portfolio assets at year-end. a. What is the net asset value at the start and end of the year?

What is the rate of return for an investor in the fund?

Moody Farms just paid a dividend of $2.65 on its stock. The growth rate in dividends is expected to be a constant 3.8% per year indefinitely. Investors require a return of 15% for the first 3 years, a return of 13% for the next 3 years, and a return of 11% thereafter. What is the current share price? Please work step by step in Excel, thanks so much!

Evaluating risk and return. Stock X has an expected return of 9.5 percent, a beta coefficient of 0.9, and a 30 percent standard deviation of expected returns. Stock Y has a 13 percent expected return, a beta coefficient of 1.3, and a 20 percent standard deviation. The risk-free rate is 5 percent, and the market risk premium is 5.5 percent.

a) Calculate the coefficient of variation of each stock.

b) Which stock is riskier for diversified investors? Which stock is riskier for undiversified investors?

c) Use the CAPM model to calculate each stock’s required rate of return.

d) On the basis of the two stocks’ expected and required returns, which stock would be more attractive to a diversified investor?

e) Calculate the required return of a portfolio that has $7,000 invested in Stock X and $3,000 invested in Stock Y.

f) If the market risk premium increased to 6.5 percent, which of the two stocks would have the larger increase in its required return? Why would the market risk premium increase?

a. A 10-year 5% coupon bond has a yield of 8% and a duration of 7.85 years. If the bond yield increases by 60 basis points, what is the percentage change in the bond price?

b. Alpha Insurance Company is obligated to make payments of $2 million, $3 million, and $4 million at the end of the next three years, respectively. The market interest rate is 8% per annum.

i. Determine the duration of the company’s payment obligations.

ii. Suppose the company’s payment obligations are fully funded and immunized using both 6-month zero coupon bonds and perpetuities. Determine how much of each of these bonds the company will hold in the portfolio.

I would like to know the answer of question bi and bii.

Halliford Corporation expects to have earnings this coming year of $3.00 per share. Halliford plans to retain all of its earnings for the next two years. For the subsequent two​ years, the firm will retain 50% of its earnings. It will then retain 20% of its earnings from that point onward. Each​ year, retained earnings will be invested in new projects with an expected return of 25.00% per year. Any earnings that are not retained will be paid out as dividends. Assume​ Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If​ Halliford's equity cost of capital is 10.0%, what price would you estimate for Halliford​ stock?

Write a brief summary of the explantation of the shape of the term structure of interest rates: Liquidity Premium Theory

By maximizing the price per share of a common stock, we will ensure shareholders' wealth is maximized.

True

False

Upton Corporation is expected to pay the following dividends over the next four years: $16, $12, $11, and $7.50. Afterwards, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 16 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Please provide as many details as possible on formulas and calculations (Excel preferred). Thank you.

Please provide details as much as possible with formulas and calculations (excel is preferred). Thank you.

Assume a purchase price of $10 Million for both properties.

(a) What is the expected total return (IRR) on a 10-year investment in each property? Use a

financial calculator or equation solver for this.

(b) If the 10% cap rate represents a fair market value for each property, then which property must

be the riskier investment, so that no mispricing has occurred?

(c) What is the approximate annual growth rate in operating cash flows for each building during

first nine years? This is simply the percentage-change in cash flows.

(d) How is the growth rate related to the cap rate and the investor's IRR in each property?

Assuming each property is priced at its required rate of return (i.e. making it NPV=0), what

general economic relationship discussed in class does this show?

Yuri is willing to invest $30,000 for six years, and is an economically rational investor. He has identified three investment alternatives (X, Y, and Z) that vary in their method of calculating interest and in the annual interest rate offered. Since he can only make one investment during the six-year investment period, complete the following table and indicate whether Yuri should invest in each of the investments.

Note: When calculating each investment’s future value, assume that all interest is earned annually. The final value should be rounded to the nearest whole dollar.

1. You lend $900 to a friend who promises to pay you $250 at the end of each of the next 4 years.

a. Draw a timeline from your perspective.

b. If you can reliably earn 4% per year, what is the net present value (NPV) of the loan?

2. You own a perpetual preferred stock issued by Goldman Sachs. If the GS preferred pays a dividend of $.80 per year and today’s market rate for this preferred is 3.0% per year, what is its current market price?

3. If the dividend of the preferred stock described in Q #2 is scheduled to increase 1.0% per year, what is its current market price?

4. You won the New York Get Rich Quick Lottery, and you must decide if you should take a LUMP sum of $25 million now or an ANNUITY of $2,000,000 per year for 20 years. a. If you can reliably earn 3% per year, which option is better? b. If you can reliably earn 6% per year, which option is better?

5. An APR reflects __________ interest only; but an EAR includes _________ interest.

Banks and other lenders are required to disclose a rate called the APR.

a. What is this rate?
b. Why did Congress require that it be disclosed?
c. Is it the same as the effective annual rate?
d. If you were comparing loans could you use their APRs to determine the loan with the lowest effective interest rate?

How are bond prices determined in the market? What is the relationship between interest rates and bond prices? Have you ever purchased a bond? If so, what was your experience with the purchase price and the value of the bond over time? Explain the different type of risk that a bond investor and issuer face. How does a bond's term and collateral changed to affect its interest rate?

At the beginning of first quarter 2015, the bank buys an available-for-sale security for $15. At the end of the first quarter the price is $17. The bank sells the security at $18 during the second quarter 2015.

During the second quarter 2015, as the result of the sale, the bank shareholder's equity ______, the retained profit ________ and the capital reserve ________.

A. increased by $1; increased by $3; decreased by $2

B. increased by $3; increased by $1; increased by $2

C. increased by $1; increased by $3; increased by $2

D. decreased by $1; decreased by $3; increased by $2