3. Use the information in the table below (related to Tostitos Corp.) to answer the following questions

   Economic State	Probability (%) Return (%)
   Deep Recession	10	-15
   Recession	20	-10
   Normal Economy	50	2
   Economic Expansion	20	15

4. What is the expected return for Tostitos Corp.’s stock? [3 points]

5. What is the Tostitos Corp’s standard deviation of returns? [4 points]

6. What is the 95% confidence interval associated with the returns of Tostitos Corp.’s

   stock? [3 points]

7. You form a two-stock portfolio by combining Tostitos Corp.’s stock (from Question 3 above) along with the stock of TD Bank. TD Bank has a marginal tax rate of 25% and a cost of debt of 3.25%. TD Bank’s stock has an expected return of 9%, a standard deviation of returns of 25%, and a correlation coefficient with Tostitos Corp.’s returns of 0.65

8. 1. If you wish to create a portfolio with an expected return of 5%, what is the weight of each of Tostitos Corp. and TD Bank that you would hold? [4 points]

   2. What is the standard deviation of returns of this portfolio? [3 points]

   3. What is the 95% confidence interval associated with this portfolio? [3 points]

4 Scenarios with the use of call options when the investor believes the foreign currency may appreciate. tell me how the investor can use options if he believes the currency may depreciate. What options should the investor buy or sell? Tell me what happens if the investor buys this option and the option finishes 1) in the money, and 2) out of the money. Additionally, tell me what happens if the investor sells this option and the option ends both in the money and out of the money.

You have looked at the current financial statements for Reigle Homes, Co. The company has an EBIT of $3,130,000 this year. Depreciation, the increase in net working capital, and capital spending were $239,000, $104,000, and $485,000, respectively. You expect that over the next five years, EBIT will grow at 20 percent per year, depreciation and capital spending will grow at 25 per year, and NWC will grow at 15 per year. The company currently has $17,900,000 in debt and 515,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.5 percent indefinitely. The company’s WACC is 8.7 percent and the tax rate is 35 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price $

1. please include calculations/explanations to all answersYou are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 14% with a volatility of 20%. Currently, the risk-free rate of interest is 3.8%. Your broker suggests that you add Hannah Corporation to your portfolio. Hannah Corporation has an expected return of 20%, a volatility of 60%, and a correlation of 0 with the Natasha Fund.

1. Is your broker right?
2. You follow your broker’s advice and make a substantial investment in Hannah stock so that, considering only your risky investments, 60% is in the Natasha Fund and 40% is in Hannah stock. When you tell your finance professor about your investment, he says that you made a mistake and should reduce your investment in Hannah. Is your finance professor right?
3. You decide to follow your finance professor’s advice and reduce your exposure to Hannah. Now Hannah represents 15% of your risky portfolio, with the rest in the Natasha fund. Is this the correct amount of Hannah stock to hold?
4. Calculate the Sharpe ratio of each of the three portfolios. What portfolio weight in Hannah stock maximizes the Sharpe ratio?

You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the​ drug's profits will be $2 million in its first year and that this amount will grow at a rate of 5% per year for the next 17 years. Once the patent​ expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is10% per​ year?

Calculate the CPR and SMM using the 350% PSA schedule for months t=1 through t=30. Display your results in a table below with four columns labeled, from left to right, t, PSA, CPR, SMM.

Question 16 A stock currently trades at $52. It is expected that dividends of $1.00/share will be paid to owners of the stock at 1 month and at 4 months from the current date. Consider these dates as ex-dividend dates as well. The continuously compounded risk free rate is 5%. European call and put options on the stock with exercise prices of $50 and 6 months to the expiration date are currently trading. a) Calculate the lower bound for the value of the European call. (1 mark) b) How would you arbitrage if the European call option has a market price (premium) of $1.00? In your answer clearly identify your position in each relevant instrument. (1 mark) c) If the European call option has a market price (premium) of $2.00, based on put-call parity, what should be the price of a European put on the stock with the same exercise price and time to expiration? (1 mark) d) Calculate the lower bound for the value of an American call option on the stock with an exercise price of $50 and a time to expiration of 6 months. (1 mark)

ABCDEF Corp. currently pays $3.80 in dividend as of this year. ABCDEF’s dividends will grow by 4.1% each year for next 15 years, and then grow by 3.8% each year afterward. What’ the present value of the firm’ tock given this information assuming that the required rate of return for the firm’ industry is 10.1%?

Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $29,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $370,000. Third, after he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of $1,250,000 to his nephew Frodo. He can afford to save $3,100 per month for the next 10 years. If he can earn an EAR of 10 percent before he retires and an EAR of 7 percent after he retires, how much will he have to save each month in Years 11 through 30? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

SHOW ALL WORK

Can you show me how to do this step by step? We are not allowed to use excel. Everything has to be done by hand or with a financial calculator

You are scheduled to receive annual payments of $10,000 for each of the next 25 years. Your discount rate is 8.5%. What is the difference in the present value if you receive these payments at the beginning of each year rather than at the end of each year

You are a security analyst in ABC Investment Company Limited and are asked to analyse BBA Company, an IT employment agency that supplies computer programmers to financial institutions. BBA’s beta coefficient is 1.2. The risk-free rate is 7% and the expected rate of return on the market is 12%. BBA just paid a dividend of $2.00 each share.

(c) Now, assume that BBA’s dividends are expected to grow at 30% per year for the next 3 years, and then maintain a long-run constant growth rate of 6% per year in the foreseeable future.

(i) What is BBA’s stock price today?

(ii) What are the expected dividend yield and capital gain yield today?

(iii) What are the expected dividend yield and capital gain yield in Year 3?

Suppose that Ramos contributes $6000/year into a traditional IRA earning interest at the rate of 4%/year compounded annually, every year after age 35 until his retirement at age 65. At the same time, his wife Vanessa deposits $4700/year into a Roth IRA earning interest at the same rate as that of Ramos and also for a period of 30 years. Suppose that the investments of both Ramos and Vanessa are in a marginal tax bracket of 35% at the time of their retirement and that they both wish to withdraw all of the money in their IRAs at that time.

(a) After all due taxes are paid, who will have the larger amount?

RamosVanessa   

(b) How much larger will that amount be? (Round your answer to the nearest cent.)
$

Discuss the three different ways a financial manager can choose a benchmark. Provide an example for each.