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The market's expected return is 11% and Treasury bills return is 5%. According to the CAPM, which stock is a better buy? Determine the alpha of each stock?
Independent random samples taken on two university campuses revealed the following information concerning the average amount of money spent on non-textbook purchases at the university's bookstore du
Assume that the risk premium on the market portfolio is estimated at 8% with a standard deviation of 22%. Determine the risk premium on a portfolio invested 25% in GM with a beta of 1.15 and 75% in
Assume the real interest rate is 3% per year, and the expected inflation rate is 8%. Determine the nominal interest rate?
Assume that you observe the investment performance of 200 fund managers and rank them by investment returns throughout the year.
Suppose that the rate of return on the fund portfolio is 10% annually. Determine the value of $10,000 investment in Class A and Class B shares if the shares are redeemed after:
An economist has predicted that the probability of a rise in the GDP is 20%, whereas the probability of a fall in the GDP is 40%. What is the probability that the stock will go up 20%?
If a mutual fund consists of an initial NAV of $20 at the start of the month, makes income distribution of $0.15 and capital gain distribution of $0.05, and ends the month with NAV of $21.10. Determ
A small stock brokerage firm wants to determine the average daily sales (in dollars) of stocks to their clients. A sample of the sales for 36 days revealed average daily sales of $200,000. Assume th
Assume that the price goes down to $70. Are you making money or losing money? How much? Determine your rate of return?
Find the present value of tuition payments if the interest rate is 5% per year? How much would you require to have in bank now to fund all 13 years of tuition?
You have just received the windfall from the investment you made in friend's business. Find the future value of windfall in three years.
If interest rate is 8%, find the present value of the cash flows? Determine future value in three years of present value you computed in (a)?
How does the priority of different security holders inbankruptcy liquidation affect the required rate of return on different securities? In other words, why do bond investors have lower required rat
If, in addition, firm increased its revenues by 20% (while maintaining this higher profit margin and without changing its assets or liabilities), what would be its ROE?
For families with young children or couples with a living standard that is relatively high for their income, the amount of insurance needed will be high. As a result,
Determine the EBIT/interest coverage ratio of each firm? Which firm may have more difficulty meeting its debt obligations? Describe.
In fiscal year 2011, Starbucks Corporation (SBUX) had revenue of $11.70 billion, gross profit of $6.75 billion. Compare gross margins for Starbucks and Peet's.
Jack is driving his car when Tom runs a red light and hits Jack. Both men have liability insurance. Whose insurance covers the cost of Jack's car repairs and medical bills, and why?
The transfer for value rule does not apply to transferees with a valid insurable interest in the life of the insured.
A policy received in a 1035 exchange has an investment in the contract in the amount of the fair market value of the old policy.
From all original estimates given, prepare estimated contribution margins by product line for the next fiscal quarter. Also, show the contribution margins per unit.
Under what circumstances would one hedge with options? Under what circumstances would one hedge with futures? What are the advantages and disadvantages of each hedging alternative?
Should firm increase growth by attaining other companies for synergies or grow internally? Do they have infrastructure to grow internally?
Should firm increase their capital expenditures to increase competitiveness? This will almost always be true but what segments of business get most capital allocated to them and why?