Q7: Show the Portfolio Standard Deviation (equation). Say for total returns on assets in a stock portfolio. Show equations!

--What would LOW covariance between stocks in the portfolio have on the portfolio standard deviation? Q8: What is the value of using regression techniques? Show Time-Series Forecast Regression Equation/Definition: 5 Variable Model!

--What is and how would you use, in analyzing stocks or companies: Show Equations:

--Cross-Sectional Regression:

--Time-Series Regression (Forecasting)

Q9: What is the difference between un-systematic and systematic risk? Show graph! Give Examples.

Unsystematic Risk: Systematic Risk:

Graph:

--What type of risk can be diversified away? How would you do this? What statistical measures would you have to look at? Explain!

(IRR calculation​) Determine the IRR on the following​ projects:

a. An initial outlay of $10,000 resulting in a single free cash flow of $16,863 after 7 years

b. An initial outlay of ​$10,000 resulting in a single free cash flow of $50,003 after 14 years

c. An initial outlay of ​$10,000 resulting in a single free cash flow of $114,691 after 23 years

d. An initial outlay of $10,000 resulting in a single free cash flow of ​$14,283 after 3 years

9

Q10: Show an example of a Corporate Balance Sheet:

Assets Liabilities

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Q14: Show Four (4) Intrinsic Valuation Methods for the following (Equations/Definitions): Give and Example!!!

Perpetuity Model:

Equation:

Example:

Gordon Growth:

Equation:

Example:

Multiple (P/E) Approach:

Equation:

Example:

Q13: Show Calculations/Definitions for the following Financial Ratios/Equations: Price-to-Earning (P/E) Ratio:

Earnings Per Share (EPS):

Weighted Average Cost of Capital (WACC):

Capital Asset Pricing Model (CAPM):

Q6: What is the Correlation Coefficient (Say between two stock returns over time)? How do standard deviations and covariance interact in this equation (show equation)? What is the correlation between stocks/bond market returns, and inflation/inflation expectations/interest rates over time? What does a -1, 0, and +1 correlation mean? Show Equation/Definition!!! and answer all questions!

(NPV with varying required rates of return​) Gubanich Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of ​$4,000,000 and would generate annual free cash inflows of ​$1,000,000 per year for 7 years. Calculate the​ project's NPV ​given:

a. A required rate of return of 9 percent

b. A required rate of return of 11 percent

c. A required rate of return of 15 percent

d. A required rate of return of 16 percent

Q5: What is Covariance between variables (say return between stocks over time)? (Show equation) What does this measure? What if you had high, medium or low covariance between stock returns? What does this tell you and what are the implications? Show Equation/Definition!!, answer all questions.

Q4: What is the “Coefficient of Variation?

What is the inverse? (Show equations/diagrams)

What does it tell you in regards to units of risk and return?

Why is this important for a risk-averse investor?

How would you use these measurements? Show Equations/Definitions (2)!!

Coefficient of Variation:

Risk-Adjusted Rate of Return (Inverse):

Sharp Ratio:

Jensen Ratio:

Treynor Ratio:

Negotiable Instruments (NI), and related issue that often affect our lives. Well, well, checks are a great way of paying for goods and or services. However, these days it seems that checks are being used as tender less and less. Again, due to fraud and dishonesty some of the reasons are that retailers are refusing to take checks as payments. This is especially true of smaller businesses that have been "burnt" by accepting checks. So often you will see a posted sign that says, "sorry for the inconvenience, but we cannot take personal checks as payment." Check fraud is a real problem for our society. It costs us so much to recover from them. Banks are repaying customers for stolen checks and it is not fair

On the other hand people steal checks all the time. Once I had a box of checks stolen and the perpetrators used the checks at various places to pay for stuff. In addition, they cashed some of them. That was back in the late 1980's. Online banking was not an option at that time. So it took a long time for me to realize that....Of course, the onus was on me to prove to the bank that my checks were stolen and used. They eventually reimbursed me for cashed one, but not the ones used to pay for services and goods.

Some questions to reflect on: How can we prevent such fraudulent behavior, can check fraud be stopped? Are checks becoming obsolete? How do you feel about online banking?

​Rally, Inc., is an​ all-equity firm with assets worth $ 24 billion and 6 billion shares outstanding. Rally plans to borrow $ 10 billion and use funds to repurchase shares.​ Rally's corporate tax rate is 38 %​, and Rally plans to keep its outstanding debt equal to $ 10 billion permanently.

a. Without the increase in​ leverage, what would be​ Rally's share​ price?

Without the increase in​ leverage, Rally's share price is ​$ nothing. ​ (Round to the nearest​ cent.)

b. Suppose Rally offers $ 4.49 per share to repurchase its shares. Would shareholders sell for this​ price?

▼ Yes/No . ​(Select from the​ drop-down menu.) The minimum share price they would sell for is ​$ nothing. ​ (Round to the nearest​ cent.)

c. Suppose Rally offers $ 4.79 per​ share, and shareholders tender their shares at this price. What will be​ Rally's share price after the​ repurchase?

If Rally offers $ 4.79 per​ share, and shareholders tender their shares at this​ price, the share price after the repurchase will be ​$ nothing. ​(Round to the nearest​ cent.)

d. What is the lowest price Rally can offer and have shareholders tender their​ shares? What will be its stock price after the share repurchase in that​ case?

The lowest offer per share is ​$ nothing. ​ (Round to the nearest​ cent.) The stock price after repurchase is ​$ nothing. ​ (Round to the nearest​ cent.)

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm’s production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $25,088.00 per year for 8 years and costs $104,097.00. The UGA-3000 produces incremental cash flows of $27,444.00 per year for 9 years and cost $124,467.00. The firm’s WACC is 7.75%. What is the equivalent annual annuity of the GSU-3300?

A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm’s production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $26,762.00 per year for 8 years and costs $103,375.00. The UGA-3000 produces incremental cash flows of $29,533.00 per year for 9 years and cost $125,250.00. The firm’s WACC is 8.97%. What is the equivalent annual annuity of the UGA-3000?

Thanks!

Considering Purchasing Power Parity and the Law of One Price:

a. Assume that the current price of a Big Mac in the United States today is $2.75. Assume also that the current price of a Big Mac in Malaysia is 6.5000 ringgits and that the current USDMYR exchange rate is 3.0250 ringgits per $. What is the implied PPP of the USD?

b. Using the assumptions above, what is the under (-) / over (+) valuation of Malaysian ringgits versus the U.S. dollar in percentage terms?

c. What are the long-term implications associated with your answer to part b.?