Stock X has a 9.0% expected return, a beta coefficient of 0.7, and a 40% standard deviation of expected returns. Stock Y has a 13.0% expected return, a beta coefficient of 1.3, and a 20% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%.

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

   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 lower beta is riskier. Stock X has the lower beta so it is riskier than Stock Y.
   2. 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 riskier. Stock Y has the lower standard deviation so it is riskier than Stock X.
   3. 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.
   4. For diversified investors the relevant risk is measured by beta. Therefore, the stock with the higher beta is riskier. Stock Y has the higher beta so it is riskier than Stock X.
   5. 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 riskier. Stock X has the higher standard deviation so it is riskier than Stock Y.

   Calculate each stock's required rate of return. Round your answers to one decimal place.

3. 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?

   Stock X or Stock Y?

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?

   Stock X or Stock Y?

GoodLife stock is currently selling for $25.00 a share but is expected to either decrease to $22.50 or increase to $27.50 a share over the next year. The risk-free rate is 3 percent. What is the current value of a 1-year call option with an exercise price of $25?

A stock's returns have the following distribution:

Assume the risk-free rate is 4%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places.

Stock's expected return:   %

Standard deviation:   %

Coefficient of variation:

Sharpe ratio:

Ten capital spending proposals have been made to the budget committee as the members prepare the annual budget for their firm. Each independent project has a 5-year life and no salvage value.

(a) Based on a MARR of 14%, which projects should be approved?

(b) Rank-order all the projects according to desirability.

(c) If only $70,000 is available, which projects should be approved?

(d) Are the results the same if the projects are ranked on IRR? What is the opportunity cost of capital?

Please provide step by step solutions. Good solution = automatic thumbs up!

Determine which of the ratios provide the most key insights into the Starbucks current level of performance. How can you assess whether the results of your calculations are positive or negative? Explain which of the ratios give you reason to be concerned with the organization's current strategy and why.

The ratios are:

Profitability Ratios

Liquidity Ratios

Leverage Ratios

Activity Ratios

Shareholders' Return Ratios

On February 2, 2016, an investor held some Province of Ontario stripped coupons in a self-administered RRSP at ScotiaMcLeod, an investment dealer. Each coupon represented a promise to pay $100 at the maturity date on February 2, 2022, but the investor would receive nothing until then. The value of the coupon showed as $89.11 on the investor’s screen. This means that the investor was giving up $89.11 on February 2, 2016, in exchange for $100 to be received just less than six years later.

a. Based upon the $89.11 price, what rate was the yield on the Province of Ontario bond? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Rate of return             %

b. Suppose that on February 2, 2017, the security’s price was $91.00. If an investor had purchased it for $89.11 a year earlier and sold it on this day, what annual rate of return would she have earned? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Annual rate of return             %

c. If an investor had purchased the security at the market price of $91.00 on February 2, 2017, and held it until it matured, what annual rate of return would she have earned? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Annual rate of return             %

You had a bad accident 5 years ago and got settlement for $500,000 a year for 25 years. Circumstances has caused you to need .. You call J G Wentworth and you need cash now! JG Wentworth puts its financial wizards to work and in order to do this JG Wentworth needs to get a return of 10.5%. How much will JG Wentworth offer you for a lump sum payment?

An investment project costs $22,761 and has annual cash flows of $10,267 for six years. What is the discounted payback period if the discount rate is 5 percent?

Suppose you purchase a ten-year bond with 6 percent annual coupons. You
hold the bond for four years, and sell it immediately after receiving the fourth
coupon. If the bond's yield to maturity was 4.5% when you purchased and 7%
when you sold the bond. What is your annual rate of return on the bond in
each of the following situations:
a) All coupons were immediately spent when received.
b) All coupons were reinvested in a bank account, which pays 2 percent
interest until the bond is sold.

If you have a CEO or a person who is considered to be an insider sell a large block of stock and he gets reported through the security and exchange commission, is that a sign that the company as well as the stop is headed for challenging times?

Your client is 32 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $14,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 10% in the future.

1. If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

2. How much will she have at 70? Do not round intermediate calculations. Round your answer to the nearest cent.

   $  

3. She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round intermediate calculations. Round your answers to the nearest cent.

   Annual withdrawals if she retires at 65: $

   Annual withdrawals if she retires at 70: $

1. Complete an amortization schedule for a $24,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 9% compounded annually. If an amount is zero, enter "0". Do not round intermediate calculations. Round your answers to the nearest cent.

   	Beginning			Repayment	Remaining
   Year	Balance	Payment	Interest	of Principal	Balance
   1	$	$	$	$	$
   2
   3

2. What percentage of the payment represents interest and what percentage represents principal for each of the 3 years? Do not round intermediate calculations. Round your answers to two decimal places.

   	% Interest	% Principal
   Year 1:	%	%
   Year 2:	%	%
   Year 3:	%	%

   Why do these percentages change over time?

   1. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance declines.
   2. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance declines.
   3. These percentages change over time because even though the total payment is constant the amount of interest paid each year is declining as the remaining or outstanding balance increases.
   4. These percentages change over time because even though the total payment is constant the amount of interest paid each year is increasing as the remaining or outstanding balance increases.
   5. These percentages do not change over time; interest and principal are each a constant percentage of the total payment.
   -Select-IIIIIIIVV

Your pickup truck is high mileage and needing replacement. You have purchased a brand new F250 XLT 4 door pickup truck. You were able to negotiate a total cost of $38,000 for this vehicle. For convenience, you decided to trade your vehicle in, and the dealership is offering $5,000 for your car as a trade in. You have decided to finance this vehicle for 7 years through Texas Tech Federal Credit Union for 4.9%.
After making payments on your vehicle for two years, what is the balance remaining on the loan?

In your opinion, can employers expect highly engaged employees who seek to improve the performance of the firm if they continue to use nonstandard work arrangements? Justify your answer.

Question 3

The chance of loss could be increased or decreased by different conditions which are called hazards. For each of the following, identify the type of hazard.

a) A motorist drives too fast.

b) A man fakes an accident to collect money from an insurer.

c) The new state regulation that require insurers not paying any claims in case of suicide.

Question 4

a) Explain how a society benefits from loss prevention.

b) Give at least three examples of loss-prevention programs supported by insurance companies.