A(n) 8.5%, 25-year bond has a par value of $1,000 and a call price of $1050. (The bond's first call date is in 5 years.) Coupon payments are made semiannually (so use semiannual compounding where appropriate). a. Find the current yield, YTM, and YTC on this issue, given that it is currently being priced in the market at $ 1175. Which of these 3 yields is the highest? Which is the lowest? Which yield would you use to value this bond? Explain. b. Repeat the 3 calculations above, given that the bond is being priced at $825. Now which yield is the highest? Which is the lowest? Which yield would you use to value this bond?
In: Finance
Four of your best friends from college are now mutual fund managers (maybe you should have kept in touch after graduation). The risk-free rate was 2 percent and the S&P 500 market risk premium was 10 percent for 2019. Using the Capital Asset Pricing Model, provide the benchmark Security Market Line predicted return for each fund in 2019 and place them in the table below.
|
Fund Manager |
2019 Performance |
BETA |
StdDev |
Corr. |
SML Predicted Return |
|
Devo |
8% |
0.55 |
11% |
25% |
|
|
Grodge |
11 |
0.70 |
7 |
50 |
|
|
MsMo |
13 |
1.20 |
12 |
50 |
|
|
SpaceMan |
18 |
1.60 |
10 |
80 |
a. Which of your friends has the fund with the highest market risk? The highest total risk?
Highest Market Risk _______
Highest Total Risk ______
b. Compared to the SML benchmark, which of your friends had the best performance? The worst?
Best Performance______
Worst Performance______
c.You have estimated that MsMo will provide a return of 12% for investors in 2020, while the risk-free rate is 3 percent and the S&P 500 market risk premium is 8.0 percent for 2020. Given these estimates, do you feel that MsMo will out-perform or under-perform the market benchmark? (Circle 0ne)
Out-Perform Under-Perform
Market Benchmark _________
d. What is the implied standard deviation of the returns for the Standard & Poor 500 (market return) used to compute the betas in the table above?
e. You have decided to invest 25% of your funds with each of your friends. What will be the beta of your investment portfolio adopting this strategy?
Beta ______
In: Finance
Bonita Distribution markets CDs of the performing artist Unique. At the beginning of October, Bonita had in beginning inventory 2,000 of Unique’s CDs with a unit cost of $7. During October, Bonita made the following purchases of Unique’s CDs.
|
Oct. 3 |
2,500 | @ | $8 |
Oct. 19 |
3,000 | @ | $10 | |||
|---|---|---|---|---|---|---|---|---|---|---|
|
Oct. 9 |
3,500 | @ | $9 |
Oct. 25 |
4,000 | @ | $11 |
During October, 10,950 units were sold. Bonita uses a periodic
inventory system.
Determine the cost of goods available for sale.
| Cost of goods available for sale |
$Enter the cost of goods available for sale in dollars |
eTextbook and Media
Calculate cost per unit. (Round answer to 2 decimal places, e.g. 2.25.)
| Cost per unit |
$Enter the cost per unit in dollars |
eTextbook and Media
Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answers to 0 decimal places, e.g. 1,250.)
|
FIFO |
LIFO |
AVERAGE-COST |
||||
|---|---|---|---|---|---|---|
|
The ending inventory |
$Enter a dollar amount |
$Enter a dollar amount |
$Enter a dollar amount |
|||
|
The cost of goods sold |
$Enter a dollar amount |
$Enter a dollar amount |
$Enter a dollar amount |
eTextbook and Media
Which cost flow method results in (1) the highest inventory amount for the balance sheet and (2) the highest cost of goods sold for the income statement?
| (1) | Select a cost flow method FIFOLIFOAverage-cost produces the highest inventory amount, $Enter a dollar amount . | |
| (2) | Select a cost flow method FIFOLIFOAverage-cost produces the highest cost of goods sold, $Enter a dollar amount . |
In: Accounting
Four of your best friends from college are now mutual fund managers (maybe you should have kept in touch after graduation). The risk-free rate was 2 percent and the S&P 500 market risk premium was 10 percent for 2019. Using the Capital Asset Pricing Model, provide the benchmark Security Market Line predicted return for each fund in 2019 and place them in the table below.
|
Fund Manager |
2019 Performance |
BETA |
StdDev |
Corr. |
SML Predicted Return |
|
Devo |
8% |
0.55 |
11% |
25% |
|
|
Grodge |
11 |
0.70 |
7 |
50 |
|
|
MsMo |
13 |
1.20 |
12 |
50 |
|
|
SpaceMan |
18 |
1.60 |
10 |
80 |
a. Which of your friends has the fund with the highest market risk? The highest total risk?
Highest Market Risk _______
Highest Total Risk _______
b. Compared to the SML benchmark, which of your friends had the best performance? The worst?
Best Performance ______
Worst Performance ______
c. You have estimated that MsMo will provide a return of 12% for investors in 2020, while the risk-free rate is 3 percent and the S&P 500 market risk premium is 8.0 percent for 2020. Given these estimates, do you feel that MsMo will out-perform or under-perform the market benchmark? (Circle 0ne)
Out-Perform Under-Perform
Market Benchmark _________
d. What is the implied standard deviation of the returns for the Standard & Poor 500 (market return) used to compute the betas in the table above?
e. You have decided to invest 25% of your funds with each of your friends. What will be the beta of your investment portfolio adopting this strategy?
Beta ______
In: Finance
An expedition is sent to the Himalayas with the objective of catching a pair of wild yaks for breeding. Assume yaks are loners and roam about Himalayas at random. The probability \( p\in(0,1) \) that a given trapped yak is male is independent of prior outcomes. Let N be the number of yaks that must be caught until a pair is obtained.
(a) Show that the expected value of N is 1 + p/q + q/p, where q = 1-p.
(b) Find the variance of N.
In: Statistics and Probability
At a local dog park, there are 9 dogs in the area of large dogs and 11 in the area for small dogs. A group of six dogs is selected to receive a treat. LEAVING YOUR ANSWERS IN COMBINATORICS FORMAT, what is the probability that:
A) At least one dog is selected?
B) The same number from each area is chosen?
C) Either all selected dogs are small, or all selected dogs are large?
D) At most two large dogs are selected?
In: Statistics and Probability
Ryerson’s badminton team has 4 male members and 7 female members;
Ryerson’s tennis team has 4 male members and 3 female members.
These two groups have different members. The university decides to make the two teams have equal
number of members by randomly moving two persons from the badminton group to the tennis group. It then randomly
selects a person from the tennis group. What is the probability to get a female?
In: Statistics and Probability
Ryerson’s badminton team has 4 male members and 7 female
members; Ryerson’s tennis team has 4 male members and
3 female members. These two groups have different members. The
university decides to make the two teams have equal
number of members by randomly moving two persons from the badminton
group to the tennis group. It then randomly
selects a person from the tennis group. What is the probability to
get a female?
In: Statistics and Probability
In the computer game World of Warcraft, some of the
strikes are critical strikes, which do more damage. Assume that the
probability of a critical strike is the same for every attack, and
that attacks are independent. During a particular fight, a
character has 261 critical strikes out of 721 attacks. What is the
lower bound for the 99% confidence interval for the proportion of
strikes that are critical strikes.
Round to three decimal places (for example: 0.419). Write only a
number as your answer.
In: Statistics and Probability
6.2% of cable boxes of a certain type are defective. Let the random variable X represent the number of defective cable boxes among 200 randomly selected boxes of this type. Suppose you wish to find the probability that X is equal to 8.
(i) Does the random variable X have a binomial or a Poisson distribution? How can you tell? (ii) If X has a binomial distribution, would it be reasonable to use the Poisson approximation? If not, why not?
In: Statistics and Probability