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Which of the following lists correctly ranks investments from having the highest returns and risk to those with the lowest returns and risk?
Investment ABD will pay you $7,000 for each of the next 9 years whereas investment XYZ will pay you $9,000 for the next 6 years. Which one do you like better today?
A standard deviation of returns of 18% and the market risk premium increases, what will happen to each of the stocks required rates of return? Will one go up more than the other?
Suppose a portfolio consists of four assets. The risk contribution of each asset is as follows: UK Large Cap, 3.9%; UK Small Cap, 4.2%; UK Bonds, 0.9%; Non-UK Bonds, 1.1%. Which of the following exp
Carter's preferred stock pays a dividend of $1.00 per quarter. If the price of the stock is $45.00, what is its nominal (not effective) annual rate of return?
You are an analyst at Bank Alpha. You were given the task to determine whether under Basel II your bank can use the simplified approach to report option exposure instead of the intermediate approach
The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price?
Would you expect that a technology firm or a utility firm would have a higher Price/Earnings ratio?
A hedge fund is long $315 million in certain stocks and short $225 million in other stocks. The hedge fund's equity is $185 million. The fund's overall beta is 0.75. Calculate the gross and net leve
Your firm hired Vikram Mehra as an active manager for its pension fund. His benchmark is the Russell 2000 growth index. Which of the following statistics are most suitable to evaluating Vikram's per
There are 100,000 shares of stock outstanding which trade at their book value of $30. Compute BWP's contribution, contribution margin, EAT, DOL and EPS.
The Clayton Corporation has warrants outstanding that permits the holder to purchase one share of common stock per warrant at $30.
Use the information from the previous two problems. Calculate BWP's breakeven point in units and dollars, with and without the purchase of the new machine.
If you take out an $8,000 car loan that calls for 48 monthly pauments at an APR of 10%, what is your monthly payment? What is the effective annual interest rate on the loan?
Identify the risks in a convertible arbitrage strategy that takes long positions in convertible bonds hedged with short positions in Treasuries and the underlying stock.
Suppose the payoff from a merger arbitrage operation is $5 million if successful, -$20 million if not. The probability of success is 83%. The expected payoff on the operation is
For a portfolio of illiquid assets, hedge fund managers often have considerable discretion in portfolio valuation at the end of each month and may have incentives to smooth returns by marking values
A local bank will pay you $100 a year for your lifetime if you deposit $2,500 in the bank today. If you plan to live forever, what interest rate is the bank paying?
What is the duration of the bank's commercial loan portfolio? What will happen to the value of its portfolio if the general level of interest rates increases from 8% to 8.5%?
If you were a major shareholder of a corporation, what kind of people would you seek-in terms of both experience and personal characteristics-to sit on your board of directors? Why?
Assuming all market interest rates are 12%, what is the duration of this bond?
what is capital rationing and how does it affect your cost of capital and your capital budgeting decisions?
Your've borrowed $4,248.68 and agreed to pay back the loan with monthly payments of $200. If the interest rate is 12% stated as an APR, What is the effetive annual rate on the loan?
Bank A pays 7.5% interest, compounded annually, on deposits, while Bank B pays 7%, compounded daily. Based on the EAR (or EFF%), which bank should you use and why?
How much would he have monthly, if he bought a 30 year annuity whose payments start next month? Assume the interest rate is 6 percent per year?