1. A Common stock of General Motors closed at $38.16 today 7/03/19 The company paid $0.40 last quarter and the growth rate is expected to be 5.5%. What will be the investor’s price assuming she has a required rate of 9.5%? What would be the yield the yield on the investment based on an annual (4x$0.40) dividend? Would she buy, sell, or hold if she is interested in trading for a profit? Explain fully.

2. AT&T 10-year bonds paying 8% currently sells for 0.96 which is equivalent to $960 in dollar terms.

a. What is the current yield?

b. What is the yield to maturity?

c. What is the investor’s price assuming she is requiring 11% return

d. Would she invest in the bond? WHY?__________________

Globo-Chem Co. reported net sales of $600 million last year and generated a net income of $132.00 million. Last year’s accounts receivable increased by $17 million. What is the maximum amount of cash that Globo-Chem Co. received from sales last year?

Stock X has a 10.0% expected return, a beta coefficient of 0.9, and a 30% standard deviation of expected returns. Stock Y has a 13.0% expected return, a beta coefficient of 1.3, and a 25.0% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%.

1. Calculate each stock's coefficient of variation. Round your answers to two decimal places. Do not round intermediate calculations.

   CV_x =

   CV_y =

2. Which stock is riskier for a diversified investor?

   1. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is less risky. Stock Y has the higher beta so it is less risky than Stock X.
   2. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is more risky. Stock Y has the higher beta so it is more risky than Stock X.
   3. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the higher standard deviation of expected returns is more risky. Stock X has the higher standard deviation so it is more risky than Stock Y.
   4. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the lower beta is more risky. Stock X has the lower beta so it is more risky than Stock Y.
   5. For diversified investors the relevant risk is measured by standard deviation of expected returns. Therefore, the stock with the lower standard deviation of expected returns is more risky. Stock Y has the lower standard deviation so it is more risky than Stock X.
   -Select-

3. Calculate each stock's required rate of return. Round your answers to two decimal places.

   r_x =  %

   r_y =  %

4. On the basis of the two stocks' expected and required returns, which stock would be more attractive to a diversified investor?
   -Select-Stock XStock YItem 6

5. Calculate the required return of a portfolio that has $7,500 invested in Stock X and $2,500 invested in Stock Y. Do not round intermediate calculations. Round your answer to two decimal places.

   r_p =  %
   
6. If the market risk premium increased to 6%, which of the two stocks would have the larger increase in its required return?
   -Select-Stock X OR Stock Y

Use the following financial statements for Lake of Egypt Marina, Inc.

h) Fixed asset turnover

i) Sales to working capital

j) Total asset turnover

k) Capital intensity

l) Debt ratio

m) Debt-to-equity

n) Equity multiplier

o) Times interest earned

p) Cash coverage

q) Profit margin

r) gross profit margin

s) Operating profit margin

t) Basic earnings power

u) ROA

v) ROE

w) Dividend payout

x) Market-to-book ration

y) PE ratio

In December 2019, Bob Prescott, the controller for the Blue Ridge Mill, was considering the addition of new on-site long-wood woodyard. The addition would have two primary benefits: to eliminate the need to purchase short-wood from an outside supplier and create the opportunity to sell short-wood on the open market as a new market for Worldwide Paper Company (WPC). The new woodyard would allow the Blue Ridge Mill not only to reduce its operating costs but also to increase its revenues. The proposed woodyard will utilise new technology that allows tree-length logs, called long-wood, to be processed directly, whereas the current process required short-wood, which had to be purchased from the Shenandoah Mill.

This nearby mill, owned by a competitor, has excess capacity that allows it to produce more short-wood than it needs for its own pulp production. The excess is sold to several different mills, including the Blue Ridge Mill. Thus, adding the new long-wood equipment would mean that Prescott would no longer need to use the Shenandoah Mill as a short-wood supplier and that the Blue Ridge Mill would instead compete with the Shenandoah Mill by selling on the short-wood market. The question for Prescott was whether these expected benefits were enough to justify the $18m capital outlay plus the incremental investment in working capital over the six-year life of the investment.

Construction would start within a few months, and the investment outlay would be spent over two calendar years: $16m in 2020 and the remaining $2m in 2021. When the woodyard begins operating in 2021, it would significantly reduce the operating costs of the mill. These operating savings would come mostly from the difference in the cost of producing short-wood on-site versus buying it on the open market and were estimated to be $2m for 2021 and $3.5m per year thereafter.

Prescott also planned on taking advantage of the excess production capacity afforded by the new facility by selling short-wood on the open market as soon as possible. For 2021, he expected to show revenues of approximately $14m, as the facility came on-line and began to break into the new market. He expected shortwood sales to reach $20m in 2022 and continue at the $20m level through 2026. Prescott estimated that the cost of goods sold (before including depreciation expense) would be 75%.

In addition to the capital outlay of $18m, the increased revenues would necessitate higher levels of inventories and accounts receivable. Therefore the amount of working capital investment each year would equal 15% of incremental sales for the year. At the end of the life of the equipment, in 2026, all the net working capital on the books would be recoverable at cost fully. Taxes would be paid at a 30% rate, and the equipment depreciation is to be calculated on a straight-line basis over the six-year life to zero balance. However, the new equipment is estimated to have a salvage value (scrap value) of $3m at the end of its life. WPC’s accountants have told Prescott that depreciation charges could not begin until 2021, when all the $18m had been spent and the equipment is in service.

Prepare cash flow statement/s and compute the NPV and IRR of the proposed project. Comment on the feasibility of the project (（the cash flow involves 2020-2026, but exclude 15% hurdle rate in NPV calculation, want to know each year working capital how to calculate in cash flow statement )

Calculate the monthly returns for 08/01/2015 – 08/31/2019 period for

(iii) Chevron:

(iv) Intel:

(v) Tesla:

What is the average monthly return and standard deviation of returns for

(i) S&P 500:

(ii) GE:

Calculate the monthly returns for 08/01/2015 – 08/31/2019 period for

(i) S&P 500:

Your aunt recently inherited $500,000 and she has decided to invest her newfound fortune in a company that has a profit margin of 6% because it is higher than the 3% interest she can get at the bank. Provide your aunt with advice regarding this potential investment including a discussion on risk, and the limitations of ratios.

Discuss 4 challenges faced in the development of an Islamic financial system.

The most recent data from the annual balance sheets of Pellegrini Southern Corporation and Jing Foodstuffs Corporation are as follows:

Balance Sheet December 31st31st (Millions of dollars)

Pellegrini Southern Corporation’s current ratio is   , and its quick ratio is   ; Jing Foodstuffs Corporation’s current ratio is   , and its quick ratio is   . Note: Round your values to four decimal places.

Which of the following statements are true? Check all that apply.

Pellegrini Southern Corporation has less liquidity but also a greater reliance on outside cash flow to finance its short-term obligations than Jing Foodstuffs Corporation.

If a company’s current liabilities are increasing faster than its current assets, the company’s liquidity position is weakening.

If a company has a quick ratio of less than 1 but a current ratio of more than 1 and if the difference between the two ratios is large, then the company depends heavily on the sale of its inventory to meet its short-term obligations.

Pellegrini Southern Corporation has a better ability to meet its short-term liabilities than Jing Foodstuffs Corporation.

An increase in the current ratio over time always means that the company’s liquidity position is improving.

1. Discuss the capital asset pricing model, including systematic and unsystematic risk and return, and how to avoid risk.

2. Discuss the three forms of the efficiency market hypothesis.

(note very important: post a new post that have not alreadt been posted)

You would like to vacation in Hawaii for one week each year. You can buy a time share for a vacation home in Hawaii for $18,500 today and a maintenance fee of $660 per year starting next year. You expect to sell the time share in 10 years for $19,000 . Alternatively you can just pay for the week vacation each year (starting next year). Each year will cost you $1,500 . If your investments earn 5% per year (compounded annually) which alternative is cheaper and by how much in present value terms?

1. Define culture and discuss its impact on international marketing?