##### Consider the following variance-covariance matrix rm rA rB rC rD rM 0.41 rA 0.43 0.65 rB...

Consider the following variance-covariance matrix

 rm rA rB rC rD rM 0.41 rA 0.43 0.65 rB 0.49 0.39 0.84 rC 0.30 0.13 0.30 0.58 rD 0.50 0.43 0.61 0.34 1.48

Average return

 rM rA rB rC rD R average return 0.0585 0.1122 0.0314 0.0525 -0.0563 0.03

a. if you would like to create a risky protfolio X of two stocks - stock A and stock C, how would you allocate your investments? identify the minimum variance portfolio consisting of stocks A and C

b. what is the risk(standard deviation) and return(mean) of your minimum variance portfolio consisting of stock A & C in part (a)? Compute the Sharpe ratio of your minimum variance portfolio.

c. if your complete portfolio Z consists of risky portfolio X and risk-free assets(t-bill) with capital allocation of 20% on T-bills and remaining on risky assets, what is the return and standard deviation of your complete portfolio Z. Compare your answers with answer in part (b)

d. Estimate the systematic risk(beta) of each stock(stock A, B,C and D) required rate of return for each stock.

e. Identify each stock whether it is overpriced or underpriced or correctly priced

f. If you have a risky portfolio Y which consists of all four stocks with eq. what is your portfolio beta. What is the required rate of return on you as postulated by SML.

In: Finance

##### (Bond valuation​) You own a 10​-year, ​$1,000 par value bond paying 6.5 percent interest annually. The... (Bond valuation​) You own a 10​-year, ​$1,000 par value bond paying 6.5 percent interest annually. The market price of the bond is ​$925​, and your required rate of return is 9 percent. a. Compute the​ bond's expected rate of return. b. Determine the value of the bond to​ you, given your required rate of return. c. Should you sell the bond or continue to own​ it? ____________________________________________________________________________________________ ​(Yield to maturity​) Assume the market price of a 7​-year bond for Margaret Inc. is ​$1,100​, and it has a par value of 1,000. The bond has an annual interest rate of 9​% that is paid semiannually. What is the yield to maturity of the​ bond?

The yield to maturity of the bond is ____%

In: Finance

##### The current price of Gringotts Bank Corporation is $50. The price will increase by 40% or... The current price of Gringotts Bank Corporation is$50. The price will increase by 40% or fall by 35% during each of the next two years. The company will pay a $9 dividend at the end of the first year if the stock price has risen, and will pay a$4 dividend if the price has fallen. It will not pay any dividends at the end of second year. The annualized, continuously compounded interest rate is 5%. What is the value of a 2-year European call option with a $45 strike price? What if it’s an American call option? In: Finance ##### (Bond valuation​) You are examining three bonds with a par value of ​$1,000 ​(you receive ​$1,000... (Bond valuation​) You are examining three bonds with a par value of ​$1,000 ​(you receive ​$1,000 at​ maturity) and are concerned with what would happen to their market value if interest rates​ (or the market discount​ rate) changed. The three bonds are Bond Along dash—a bond with 33 years left to maturity that has an annual coupon interest rate of 12 ​percent, but the interest is paid semiannually. Bond Blong dash—a bond with 11 years left to maturity that has an annual coupon interest rate of 12 ​percent, but the interest is paid semiannually. Bond Clong dash—a bond with 17 years left to maturity that has an annual coupon interest rate of 12 ​percent, but the interest is paid semiannually. What would be the value of these bonds if the market discount rate were a. 12 percent per year compounded​ semiannually? b. 3 percent per year compounded​ semiannually? c. 16 percent per year compounded​ semiannually? d. What observations can you make about these​ results? In: Finance ##### Explain briefly how each of the following transactions would affect a company’s balance sheet. Remember, assets... Explain briefly how each of the following transactions would affect a company’s balance sheet. Remember, assets must equal liabilities plus owners’ equity before and after the transaction. a) Sale of used equipment with a book value of$300,000 for $500,000 cash. b) Purchase of a new$80 million building, financed 40 percent with cash and 60 percent with a bank loan.

c) Purchase of a new building for $60 million cash. d) A$40,000 payment to trade creditors.

e) A firm’s repurchase of 10,000 shares of its own stock at a price of $24 per share. f) Sale of merchandise for$80,000 in cash.

g) Sale of merchandise for $120,000 on credit. h) Dividend payment to shareholders of$50,000

In: Finance

##### 18. If a not-for-profit clinic has $70,000 in assets and$40,000 in liabilities, what is their...

18. If a not-for-profit clinic has $70,000 in assets and$40,000 in liabilities, what is their equity balance?

12. What are the differences between the income statement and balance sheet in regard to timing and organization?

19. Should financial statement and operating indicator analyses be conducted only on historical data?

20. What is the difference between trend analysis and comparative analysis?

13. What are the three major categories of assets?

In: Finance

##### You just started your first full time job out of college. You recall from your finance...

You just started your first full time job out of college. You recall from your finance course the importance of starting to save early for retirement. You plan on making deposits of $215 per pay check into a stock account and$130 per pay check into a bond account. You are paid every two weeks (26 pay checks per year). It is your plan to make these deposits for the next thirty-years. You expect that you will earn 8.75% per year on the stock account and 5.5% on the bond account. When you retire in thirty-years you plan on depositing the balance the money into a money-market account that you expect should pay 2%. How much could you withdraw monthly, and have the money last for the next thirty years?

In: Finance

##### Financial​ ratios: Profitability. The financial statements for Tyler​ Toys, Inc. are shown below. Calculate the profit​...

Financial​ ratios: Profitability. The financial statements for Tyler​ Toys, Inc. are shown below. Calculate the profit​ margin, return on​ assets, and return on equity for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the​ shareholders?

 Tyler Toys, Inc. Income Statement for Years Ending December 31, 2013 and 2014 2014 2013 Revenue $14,147,036$13,566,155 Cost of goods sold $-8,447,557$-8,131,158 Selling, general, and administrative expenses $-997,273$-980,121 Depreciation $-1,498,746$-1,472,768 EBIT $3,203,460$2,982,108 Interest expense $-376,332$-355,167 Taxes $-1,074,309$-998,238 Net income $1,752,819$1,628,703

 Tyler Toys, Inc. Balance Sheet as of December 31, 2013 and 2014 ASSETS 2014 2013 LIABILITIES 2014 2013 Current assets Current liabilities Cash $190,940$187,570 Accounts payable $1,545,880$1,455,686 Investments $181,149$121,240 Short-term debt $312,342$333,103 Accounts receivable $668,147$630,715 Total current liabilities $1,858,222$1,788,789 Inventory $588,466$564,327 Long-term liabilities Total current assets $1,628,702$1,503,852 Debt $7,285,512$6,604,056 Long-term assets Other liabilities $1,463,963$1,345,334 Investments $3,053,227$2,827,600 Total liabilities $10,607,697$9,738,179 Plant, property, and equipment $8,497,215$8,481,174 OWNERS’ EQUITY Goodwill $348,708$346,172 Common stock $1,457,797$1,454,890 Intangible assets $1,158,090$957,807 Retained earnings $2,620,448$2,923,536 Total owners’ equity $4,078,245$4,378,426 TOTAL LIABILITIES TOTAL ASSETS $14,685,942$14,116,605 AND OWNERS’ EQUITY $14,685,942$14,116,605

What is the profit margin for​ 2014? _________ ​(Round to two decimal​ places.)

What is the profit margin for​ 2013? ________ ​(Round to two decimal​ places.)

What is the return on assets for​ 2014? ________ ​(Round to two decimal​ places.)

What is the return on assets for​ 2013? _______ ​(Round to two decimal​ places.)

What is the return on equity for​ 2014? ________ (Round to two decimal​ places.)

What is the return on equity for​ 2013? ________ ​(Round to two decimal​ places.)

Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the​ shareholders? ​(Select the best​ response.)

A.These ratios indicate a somewhat strong firm performance for the equity holders with an ROE of over 43.01 % for 2014.

B.These ratios indicate a somewhat weak firm performance for the equity holders with an ROE of over 43.01 % for 2013.

C.These ratios indicate a somewhat weak firm performance for the equity holders with an ROE of over 43.01 % for 2014.

D.These ratios indicate a somewhat strong firm performance for the equity holders with an ROE of over 43.01 % for 2013.

In: Finance

##### Describe how the cost of capital would change over different stages of a new venture? Explain...

Describe how the cost of capital would change over different stages of a new venture? Explain the reason for such a pattern?

In: Finance

##### How to write an essay about people who prepare themselves for career that will enable them...

How to write an essay about people who prepare themselves for career that will enable them to contribute to society.How many pages should be

In: Finance

##### Selling bonds. Berkman Investment Bank has the following bond deals under​ way shown below. Determine the...

Selling bonds. Berkman Investment Bank has the following bond deals under​ way shown below. Determine the net proceeds of each bond and the cost of the bonds for each company in terms of yield. The bond yield in the table is the market yield before the bank charges its commission. Assume all bonds are semiannual and issued at a par value of ​$1,000.  Company Bond Yield Commission Coupon Rate Maturity Rawlings 6.9% 1.7% of sale price 0.0% 20 years Wilson 7.8% 3.4 % of sale price 8.8% 20 years Louis Sluggers 7.6% 2.1 % of sale price 9.3% 10 years Spalding 7.9% 4.3 % of sale price 7.2% 20 years Champions 8.1% 3.3 % of sale price 6.7% 30 years For​ Rawlings, the market price of the bond is ​$ _________ ​(Round to the nearest​ cent.)

The net price of the bond is ​$________ ​(Round to the nearest​ cent.) The yield to maturity of the bond is ________% ​(Round to four decimal​ places.) For​ Wilson, the market price of the bond is ​$ __________ ​(Round to the nearest​ cent.)

The net price of the bond is ​$__________ ​(Round to the nearest​ cent.) The yield to maturity of the bond is ________% (Round to four decimal​ places.) For Louis​ Sluggers, the market price of the bond is ​$ ________ ​(Round to the nearest​ cent.)

The net price of the bond is ​$________ ​(Round to the nearest​ cent.) The yield to maturity of the bond is ________% (Round to four decimal​ places.) For​ Spalding, the market price of the bond is ​$ ________ ​(Round to the nearest​ cent.)

The net price of the bond is $________ (Round to the nearest​ cent.) The yield to maturity of the bond is ________% ​(Round to four decimal​ places.) For​ Champions, the market price of the bond is ​$ _________ ​(Round to the nearest​ cent.)

Suppose you purchase a $1,000 TIPS on January 1, 2016. The bond carries a fixed coupon of 1 percent. Over the first two years, semiannual inflation is 2 percent, 2 percent, 4 percent, and 2 percent, respectively. For each six-month period, calculate the accrued principal and coupon payment. (Do not round intermediate calculations. Round your answers to 2 decimal places.)  Accrued Principal Coupon Payment First 6 months Second 6 months Third 6 months Fourth 6 months In: Finance ##### Financial​ ratios: Financial leverage. The financial statements for Tyler​ Toys, Inc. are shown below. Calculate the... Financial​ ratios: Financial leverage. The financial statements for Tyler​ Toys, Inc. are shown below. Calculate the debt​ ratio, times interest earned​ ratio, and cash coverage ratio for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the​ shareholders?  Tyler Toys, Inc. Income Statement for Years Ending December 31, 2013 and 2014 2014 2013 Revenue$14,147,996 $13,566,458 Cost of goods sold$-8,448,120 $-8,131,722 Selling, general, and administrative expenses$-998,889 $-981,908 Depreciation$-1,497,938 $-1,472,552 EBIT$3,203,049 $2,980,276 Interest expense$-376,826 $-355,607 Taxes$-1,073,965 $-997,374 Net income$1,752,258 $1,627,295  Tyler Toys, Inc. Balance Sheet as of December 31, 2013 and 2014 ASSETS 2014 2013 LIABILITIES 2014 2013 Current assets Current liabilities Cash$191,401 $186,591 Accounts payable$1,546,332 $1,456,738 Investments$181,004 $121,148 Short-term debt$312,545 $333,684 Accounts receivable$667,879 $630,653 Total current liabilities$1,858,877 $1,790,422 Inventory$588,863 $564,957 Long-term liabilities Total current assets$1,629,147 $1,503,349 Debt$7,286,198 $6,603,683 Long-term assets Other liabilities$1,463,915 $1,345,076 Investments$3,054,247 $2,828,820 Total liabilities$10,608,990 $9,739,181 Plant, property, and equipment$8,497,918 $8,481,883 OWNERS’ EQUITY Goodwill$347,478 $346,589 Common stock$1,458,147 $1,454,033 Intangible assets$1,157,338 $957,445 Retained earnings$2,618,991 $2,924,872 Total owners’ equity$4,077,138 $4,378,905 TOTAL LIABILITIES TOTAL ASSETS$14,686,128 $14,118,086 AND OWNERS’ EQUITY$14,686,128 \$14,118,086

What is the debt ratio for​ 2014? ________ ​(Round to four decimal​ places.)

What is the debt ratio for​ 2013? ________ ​(Round to four decimal​ places.)

What is the times interest earned ratio for​ 2014? ________ ​(Round to four decimal​ places.)

What is the times interest earned ratio for​ 2013? _______ ​(Round to four decimal​ places.)

What is the cash coverage ratio for​ 2014? ______ ​(Round to four decimal​ places.)

What is the cash coverage ratio for​ 2013? ______ ​(Round to four decimal​ places.)

Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the​ shareholders? (Select the best​ response.)

A. The debt ratio is very high and would warrant concern if the cash coverage ratio or the times interest earned ratio was​ high, but with low ratios this means they are handling their large debt well.

B. The debt ratio is very low and would warrant concern if the cash coverage ratio or the times interest earned ratio was​ high, but with low ratios this means they are handling their large debt well.

C. The debt ratio is very high and would warrant concern if the cash coverage ratio or the times interest earned ratio was​ low, but with high ratios this means they are handling their large debt well.

D. The debt ratio is very low and would warrant concern if the cash coverage ratio or the times interest earned ratio was​ low, but with high ratios this means they are handling their large debt well.

In: Finance