Homework Answers
interest to be paid = 300*9% = 27 million
return received = 12% of 400 = 48 million
return on investor capital = (47 - 27)/100 = 21%
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Question 8 (2.5 points) A hedge fund leverages its $100 million of investor capital by a...
You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in fi...
You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock Investment Stock's Beta Coefficient A $160 million 0.5 B 120 million 2.2 C 80 million 4.5 D 80 million 1.0 E 60 million 3.4 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 3%, and you believe the following probability distribution for future market returns is realistic: Probability Market Return...
A firm has the following capital structure: 100 million shares outstanding, trading at £1.5 per share,...
A firm has the following capital structure: 100 million shares outstanding, trading at £1.5 per share, and £100 million of debt. The beta of the firm’s stock is 1.5. The firm’s cost of equity is 10 percent, and the yield on riskless bonds is 2.5 percent. There is no tax. Assuming that the firm can borrow at the risk free rate and that both CAPM (Capital Asset Pricing Model) and the Modigliani-Miller theorem hold, answer the following questions. i) What...
QUESTION 18 Which of the following statements is CORRECT? 1. An investor can eliminate virtually all...
QUESTION 18
Which of the following statements is CORRECT?
1.
An investor can eliminate virtually all diversifiable risk if
he or she holds a very large, well-diversified portfolio of
stocks.
2.
Once a portfolio has about 40 stocks, adding additional stocks
will not reduce its risk by even a small amount.
3.
It is impossible to have a situation where the market risk of
a single stock is less than that of a portfolio that includes the
stock.
4.
An...
d. None of the above is correct. QUESTION 15 1 points When the Federal Reserve, or...
d. None of the above is correct. QUESTION 15 1 points When the Federal Reserve, or Fed, buys $100 government bonds from the public, the U.S. money supply eventually increases by a. more than $100. Ob.exactly $100. c. less than $100. Od. It is an ambiguous change. QUESTION 16 IICuu u d. has no intrinsic value. 1 points QUESTION 13 The Federal Reserve a. was created in 1913. b. is the U.S.'s central bank. has other duties in addition to...
Question 3 (10 points) I. What were the bid price, asked price, and yield to maturity...
Question 3 (10 points) I. What were the bid price, asked price, and yield to maturity of the 5.125% June 30th. 201 1 Treasury bond displayed in Figure below? 2. What was its asked price the previous day? 3. If 30 days have passed since the last coupon payment, what is the sale, or invoice, price of the bond? U.S. Government Bonds and Notes ASK MATURITY COUPON BID ASKED CHG YLD Jun 30 1 5.125 107:11 01 2 0.7792 Jul...
Continued on from case study 8. According to the Investor Presentation, what is one strategy that...
Continued on from case study 8. According to the Investor Presentation, what is one strategy that Michael Hill has planned for its cash flow? 1. Michael Hill International Limited (hereafter known as “Michael Hill”) ordinary shares are listed on the Australian Securities Exchange (ASX). Michael Hill owns and operates approximately 300 retail jewellery stores across Australia, New Zealand and Canada. According to the ASX announcement made by Michael Hill on Date: 27/08/18 and Headline: Investor Presentation, part of Michael Hill’s...
$30,000 QUESTION 3 Imagine you live in a society with progressive taxation. Your friend makes half...
$30,000 QUESTION 3 Imagine you live in a society with progressive taxation. Your friend makes half of your salary and pays 20 percent in income taxes. Which rate most likely would be your income tax rate? (5 points) 2 percent 10 percent 20 percent 40 percent QUESTION 4 02_08_g4_q1.png Look at the bar graph. What kind of tax is depicted here? (5 points) Flat Proportional Progressive Regressive QUESTION 5 Which of these is an example of indirect tax? (5 points)...
14. If an investor buys a $50,000, 90-day T-bill for $49,2 annualized return on a simple...
14. If an investor buys a $50,000, 90-day T-bill for $49,2 annualized return on a simple (arithmetic) basis is: n l( 50 and holds i ill maturity,the 15. A newly issued T-bill with a $10,000 par value that sells for $9,850 maturity has a discount return of c. at a discount from par value d, only through a financial intermediary 16. Both T-bills and paper are a, with a stated coupon rate b at a premium above par value 17....
Billy Thornton borrowed $20,000 at a rate of 7.25%, simple interest, with interest paid at the...
Billy Thornton borrowed $20,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month. The bank uses a 360-day year. How much interest would Billy have to pay in a 30-day month? a. $139.88 b. $133.22 c. $120.83 d. $126.88 e. $146.87 1 points QUESTION 9 Suppose you borrowed $14,000 at a rate of 10.0% and must repay it in 5 equal installments at the end of each of the next 5 years. How...
You are an analyst fir a mutual fund that wanrs to include a home inprovement store...
You
are an analyst fir a mutual fund that wanrs to include a home
inprovement store in its portfolio. Given that Home Depot and Lowes
are the dominant olayers in the industry, which firm would you
recommend buying? Explain
C D F N M N O P Q R 5 T 1 LOWE's HOME DEPOT 2010-01 2001-01 2012-01 2011-01 2014-01 2005-2006-01 2017-01 220 48.835 50,208 50 52 54 56.223 52 2010-2011-01 2012-01 2013-08 2014-01 2015-2016-01 2017-01 3.112 3.560 277 73...
QUESTION 18
Which of the following statements is CORRECT?
1.
An investor can eliminate virtually all diversifiable risk if
he or she holds a very large, well-diversified portfolio of
stocks.
2.
Once a portfolio has about 40 stocks, adding additional stocks
will not reduce its risk by even a small amount.
3.
It is impossible to have a situation where the market risk of
a single stock is less than that of a portfolio that includes the
stock.
4.
An...
d. None of the above is correct. QUESTION 15 1 points When the Federal Reserve, or Fed, buys $100 government bonds from the public, the U.S. money supply eventually increases by a. more than $100. Ob.exactly $100. c. less than $100. Od. It is an ambiguous change. QUESTION 16 IICuu u d. has no intrinsic value. 1 points QUESTION 13 The Federal Reserve a. was created in 1913. b. is the U.S.'s central bank. has other duties in addition to...
Question 3 (10 points) I. What were the bid price, asked price, and yield to maturity of the 5.125% June 30th. 201 1 Treasury bond displayed in Figure below? 2. What was its asked price the previous day? 3. If 30 days have passed since the last coupon payment, what is the sale, or invoice, price of the bond? U.S. Government Bonds and Notes ASK MATURITY COUPON BID ASKED CHG YLD Jun 30 1 5.125 107:11 01 2 0.7792 Jul...
14. If an investor buys a $50,000, 90-day T-bill for $49,2 annualized return on a simple (arithmetic) basis is: n l( 50 and holds i ill maturity,the 15. A newly issued T-bill with a $10,000 par value that sells for $9,850 maturity has a discount return of c. at a discount from par value d, only through a financial intermediary 16. Both T-bills and paper are a, with a stated coupon rate b at a premium above par value 17....
You
are an analyst fir a mutual fund that wanrs to include a home
inprovement store in its portfolio. Given that Home Depot and Lowes
are the dominant olayers in the industry, which firm would you
recommend buying? Explain
C D F N M N O P Q R 5 T 1 LOWE's HOME DEPOT 2010-01 2001-01 2012-01 2011-01 2014-01 2005-2006-01 2017-01 220 48.835 50,208 50 52 54 56.223 52 2010-2011-01 2012-01 2013-08 2014-01 2015-2016-01 2017-01 3.112 3.560 277 73...
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