Consider the two empirical models for excess returns (Ri-Rf) of stocks A and B. The risk free rate (Rf) over the period was 6%, and the market’s average return (Rm) was 14%. Stock A Stock B Estimated market models Ri-Rf= 1% + 1.2(Rm – Rf) Ri-Rf = 2% + 0.8(Rm – Rf) Standard deviation of excess returns 21.6% 24.9% Find the following for each stock: i) Alpha ii) Sharpe ratio iii) Treynor ratio

The probability of winning on a lot machine is 5%. If a person plays the machine 500 times, find the probability of winning 30 times. Use the normal approximation to the binomial distribution.

A travel survey of 1500 Americans reported an average of 7.5 nights stayed when they went on vacation. Find a point estimate of the population mean. If we can assume the population standard deviation is 0.8 night, find the 95% confidence interval for the true mean.

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What is the value of a common stock if a. the firm's earnings and dividends are growing annually at 20 percent, the current dividend is $2.64, and investors require a 15 percent return on investments in common stock? b. What is the value of this stock if you add risk to the analysis and the firm's beta coefficient is 0.8, the risk-free rate is 9 percent, and the return on the market is 15 percent? c. If the price of the stock is $35, what is the rate of return offered by the stock? Should the investor acquire this stock? Explain your answer

Let X be a continuous random variable that has a uniform distribution between 0 and 2 and let the cumulative distribution function F(x) = 0.5x if x is between 0 and 2 and let F(x) = 0 if x is not between 0 and 2. Compute

1. the probability that X is between 1.4 and 1.8

2. the probability that X is less than 1.2

3. the probability that X is more than 0.8

4. the expected value of X

5. the variance of X.

The index model has been used to estimate returns on stocks A and B. The results come

as follows:

RA = 0.02 + 0.4RM + eA

RB = 0.02 - 0.1RM + eB

, with σM = 0.4, σ(eA) = 0.20, and σ(eB) = 0.30

For portfolio P with investment proportions of 0.8 in A and the rest in B:

A) What’s the standard deviation of P?

B) What percentage of P’s total risk is systematic?

C) What’s the covariance and correlation between P and the market index?

Please show all the detail, thanks!

An engineer designed a valve that will regulate water pressure on an automobile engine. The engineer designed the valve such that it would produce a mean pressure of 4.3 pounds/square inch. It is believed that the valve performs above the specifications. The valve was tested on 19 engines and the mean pressure was 4.5 pounds/square inch with a standard deviation of 0.8. A level of significance of 0.01 will be used. Assume the population distribution is approximately normal. Determine the decision rule for rejecting the null hypothesis. Round your answer to three decimal places.

We are interested to see whether the level of the minimum wage affects employment. In order to study this issue they got data from a random sample of 330 California fast food restaurants before and after an increase in the Californian minimum wage from $3.30 to $4.10 per hour. The change in full time equivalent employees per restaurant in the sample before and after the increase was 0.8 with a variance of 77.5.

Test whether this suggests the increase in the minimum wage had an effect on employment.

In 2011-2015, mutual fund manager, Diana Sauros produced the following percentage rates of return for the Mesozoic Fund. Rates of return on the market index are given for comparison. 2011 2012 2013 2014 2015 Fund −1.3 +25.0 +41.0 +12.0 +0.4 Market index −1.0 +17.0 +32.0 +11.3 −0.8 Calculate (a) the average return on both the Fund and the index, and (b) the standard deviation of the returns on each. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

The following problem description applies also to the next two problems.

A piston-cylinder device contains 2 kg of a saturated liquid mixture at an initial state 1 with p₁= 100 kPa and x₁= 0.8. The water is heated at constant pressure until its final state 2 with volume V₂ = 1.947V₁.

Its initial volume, in m³/kg, is closer to:

Its final temperature, in ^oC, is closer to:

The amount of heat supplied to the steam during the expansion process, in kJ, is closer to:

A corporate bond has 2 years to maturity, a coupon rate of 6%, a face value of $1,000 and pays coupons semiannually. The market interest rate for similar bonds is 7.5%.

What is the price of the bond (in $)?

What is the bond's duration in years?

If yields fall by 0.8 percentage points, what is the new expected bond price based on its duration (in $)?

What is the actual bond price after the change in yields (in $)?

What is the difference between the two new bond prices (in absolute $)?