1. An investment bank pays $35.10 per share for 4.6 million shares of GM Company in a firm commitment stock offering. It then can sell those shares to the public for $34 per share.
How much money does GM receive?
What is the profit to the investment bank?
What is the stock price of GM?
2. Pollo Inc.'s 8.21% bonds have a YTM of 12.66%. The estimated risk premium between the company's bonds and stocks is 4%. Pollo's cost of common equity, Re, is ____%
3. Calculate the standard deviation of the following returns. Year Return 1 -0.05 2 0.22 3 -0.08 4 0.25 5 -0.06.