Question
In: Finance
Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown...
Calculate the durations and volatilities of securities A, B, and C.
Their cash flows are shown below. The interest rate is 9%.
Pd
1 Pd 2 Pd 3 Duration Volatility
A. 45 45 50 yrs
B. 25 25 130 yrs
C. 15 15 120 yrs
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown...
Calculate the durations and volatilities of securities A, B, and
C. Their cash flows are shown below. The interest rate is 8%.
(Do not round intermediate calculations. Round "Duration"
to 3 decimal places and "Volatility" to 2 decimal
places.)
Period 1
Period 2
Period 3
Duration
Volatility
A
40
40
40
years
B
20
20
120
years
C
10
10
110
years
Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown...
Calculate the durations and volatilities of securities A, B, and
C. Their cash flows are shown below. The interest rate is 10%.
(Do not round intermediate calculations. Round "Duration"
to 4 decimal places and "Volatility" to 2 decimal
places.)
Period 1
Period 2
Period 3
Duration
Volatility
A
50
50
60
years
B
30
30
140
years
C
20
20
130
years
Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown...
Calculate the durations and volatilities of securities A, B, and
C. Their cash flows are shown below. The interest rate is 6%.
(Do not round intermediate calculations. Round "Duration"
to 4 decimal places and "Volatility" to 2 decimal
places.)
Period 1
Period 2
Period 3
Duration
Volatility
A
85
85
130
years
B
65
65
210
years
C
55
55
200
years
Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown...
Calculate the durations and volatilities of securities A, B, and
C. Their cash flows are shown below. The interest rate is 10%.
(Do not round intermediate calculations. Round "Duration"
to 4 decimal places and "Volatility" to 2 decimal
places.)
Period 1
Period 2
Period 3
Duration
Volatility
A
50
50
60
years
B
30
30
140
years
C
20
20
130
years
1. Assumed the betas for securities A, B, and C are shown here. Security Beta A...
1. Assumed the betas for securities A, B, and C are shown here.
Security Beta A 1.39 B .75 C -.93
A.
Calculate the change in return for each security if the market
experiences an increase in its rate of return of 13.7% over the
next period
B.
Calculate the change in return for each security if the market
experiences a decrease in its rate of return of 10.3% over the next
period
C. (Select he best choice below.)
A....
The cash flows for two projects, A and B, are shown in the table, below. Notice...
The cash flows for two projects, A and B, are shown in the
table, below. Notice that Project A has a life of 5 years and
Project B has a 3 year life. Calculate the NPV of each project and
calculate which should be adopted using the replacement chain
approach. Assume that the cost of capital is 10%.
Project CFs
Project CFs
Time
A
B
0
-100
-150
1
20
75
2
25
60
3
30
50
4
30
5...
8. The (net) cash flows of project C and D are shown below: Net Cash Flow...
8. The (net) cash flows of project C and D are shown below: Net
Cash Flow ($) Year Project C Project D 0 -2,000 -1,000 1 3,000 650
2 125 1,500 a. Find the crossover rates. (1.5 point) b. The cost of
capital is 12 percent. If C and D are mutually exclusive, which
project should be accepted? Why? (0.5 point)
After-Tax Cash Flows Using the data that is shown below - (a) calculate the individual after-tax...
After-Tax Cash Flows
Using the data that is shown below - (a) calculate the
individual after-tax cash flow effect of each relevant item in each
independent situation, and (b) sum the individual after-tax cash
flows in each situation to determine the overall net after-tax cash
flow.
A
B
C
Cash revenue received
220,000
1,050,000
550,000
Cash operating expenses paid
128,000
770,000
330,000
Depreciation on tax return
28,000
64,000
50,000
Income tax rate
30%
25%
20%
Do not use negative signs...
Mary Inc. is considering mutually exclusive Projects A and B, whose cash flows are shown below....
Mary Inc. is considering mutually exclusive Projects A and B,
whose cash flows are shown below. If the decision is made by
choosing the project with the higher IRR, will there be any value
loss due to the IRR-based decision? If there is a loss, how much
value will be forgone? The WACC is assumed to be 9.5%.
WACC:
Year
9.5%
0
1
2
3
4
CFA
−$2,020
$730
$730
$740
$740
CFB
−$4,100
$1,400
$1,500
$1,520
$1,530
Use a...
XYZ Inc. is considering Projects S and L, whose cash flows are shown below. Calculate NPV...
XYZ Inc. is considering
Projects S and L, whose cash flows are shown below. Calculate NPV
and MIRR of these projects and if these are mutually exclusive
which one you choose under each method?
WACC: 8.75%
Year
0
1
2
3 4
CFS
-$1,100 $375 $375
$375 $375
CFL
-$2,200 $725 $725
$725 $725
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