Use the following table to answer the question below. E[r] std. dev. S&P500 13% 25% T-bill...
Use the following table to answer the question below.
| E[r] | std. dev. | |
| S&P500 | 13% | 25% |
| T-bill | 6% | 0% |
| Borrow | 10% |
What is the minimum level of risk aversion level that will make an investor neither borrow nor lend?
What is the maximum amount of risk aversion level that will make an investor neither borrow nor lend?
Homework Answers
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Use the following table to answer the question below.
E[r]
std. dev.
S&P500
13%
25%
T-bill...
Use the following table to answer the question below. Expected ret. std. dev. S&P500 13% 25%...
Use the following table to answer the question below. Expected ret. std. dev. S&P500 13% 25% ABC Fund 16% 27% T-bill 4% Borrow 6% What is the highest fee that a client who is currently borrowing would be willing to pay to invest in your fund instead of S&P500? Round your answer to 4 decimal places. For example, if your answer is 3.205%, then please write down 0.0321.
Please use the following formulas to answer the question: 4. An investor has a risk aversion...
Please use the following formulas to answer the question:
4. An investor has a risk aversion of 4. If she wants to invest all her wealth in the stock market that has a standard deviation of 16%. What is the implied risk premium of the market? What is the market risk premium if she has a risk aversion of only 2? 1. Arithmetic average stock returns .-= (+r)x(1+r)x.X(1+r)]š –1 = 19+r)*-1 2. Geometric average stock returns 3. APR versus EAR:...
***Would especially like help with #25*** Use the table below for Problems 22 - 25. The...
***Would especially like help with #25***
Use the table below for Problems 22 - 25. The debt and equity columns describe different possible capital structures A-G for Company XYZ. The Method 1-3 columns indicate the WACC for capital structures A-G and are consistent with the Modigliani and Miller Propositions. Structure Total Assets 8000 Equity Method 1 16.13% 13.84% 13.20% 12.24% 11.00% 11.20% 13.00% Method 2 5.49% 6.28% 9.47% 9.72% 9.60% 10.73% 13.00% Method 3 13.00% 13.00% 13.00% 1200 1000 800...
If you an answer only one so please give the answers for B QUESTION 5 There...
If you an answer only one so please give the answers for B
QUESTION 5 There are two investments available: Vanguard S&P 500 Index Fund (VFINX) and a risk-free asset. The VFINX has an expected return of 12% and the standard deviation of 20%. The risk-free asset offers two rates: the lending rate is 2% while the borrowing rate is 8%. a. (10%) Assuming that investors are maximizing utility function U=E(r)-0.5A02 in making financial decisions, what is the range of...
Use the table below for Problems 22 - 25. The debt and equity columns deseribe different...
Use the table below for Problems 22 - 25. The debt and equity columns deseribe different possible capital structures A-G for Company XYZ. The Method 1-3 columns indicate the WACC for capital structures A-G and are consistent with the Modigliani and Miller Propositions EquityMethod Structure Total Assets 8000 4000 1200 1000 800 600 400 400 400 400 400 400 400 400 1 16.13% 13.84% 13.20% 12.24% 1 1.00% 11 .20% 13.00% Method 2Method 3 13.00% 13.00% 13.00% 13.00% 13.00% 13.00%...
Use the table below for Problems 22 - 25. The debt and equity columns describe different...
Use the table below for Problems 22 - 25. The debt and equity columns describe different possible capital structures A-G for Company XYZ. The Method 1-3 columns indicate the WACC for capital structures A-G and are consistent with the Modigliani and Miller Propositions Structure Total Assets 8000 4000 1200 1000 800 600 400 Equity 400 400 400 400 400 400 400 Method 1 16.1 3% 13.84% 13.20% 12.24% 1 1.00% 11 .20% 13.00% Method 2Method 3 13.00% 13.00% 13.00% 13.00%...
QUESTION 2 Use the table below to answer the following question(s). Shirley Templeton is a real...
QUESTION 2 Use the table below to answer the following question(s). Shirley Templeton is a real estate agent for Paralol Realty. Shirley is given the responsibility to manage potential customers for 5 of the Realty's bungalows. These 5 bungalows are situated in close proximity. In order to make traveling easier, Shirley decides to move to a location closer to the 5 bungalows. The table below gives the location (X and Y coordinates) of the 5 bungalows along with the number...
Use the table below to answer the following question(s) by invoking the binary constraints on the...
Use the table below to answer the following question(s) by invoking the binary constraints on the variables using the standard Solver. Below is the spreadsheet for a project selection model: IA Project Selection Model 1 B Data 4 Project 1 Project 2 Project 3 Project 4 Project 5 Available Resources 15 $160,000 $250,000 $175,000 $150,000 $225,000 16 Expected Return (NPV) Cash requirements Personnel requirements $45,000 $70,000 $28,000 $52,000 $55,000 $175,000 7 10 9 Model 10 111 Project selection decisions 12...
QUESTION 1 Use the table below to answer the following question(s). Shirley Templeton is a real...
QUESTION 1 Use the table below to answer the following question(s). Shirley Templeton is a real estate agent for Paralol Realty. Shirley is given the responsibility to manage potential customers for 5 of the Realty's bungalows. These 5 bungalows are situated in close proximity. In order to make traveling easier, Shirley decides to move to a location closer to the 5 bungalows. The table below gives the location (X and Y coordinates) of the 5 bungalows along with the number...
QUESTION 1 Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. utsourcing Decision Model Data Manufactured in-house ix...
QUESTION 1 Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. utsourcing Decision Model Data Manufactured in-house ixed cost Unit variable cost 60,000 130 Purchased from supplier Unit cost 10 165 12 Demand volume 13 14 Model 15 16 1,000 otal manufacturing cost Total purchased cost 18 19 Difference 20 Decision We assume that the production (demand) volume is normally distributed with a mean of 1,000 and a standard deviation of...
Please use the following formulas to answer the question:
4. An investor has a risk aversion of 4. If she wants to invest all her wealth in the stock market that has a standard deviation of 16%. What is the implied risk premium of the market? What is the market risk premium if she has a risk aversion of only 2? 1. Arithmetic average stock returns .-= (+r)x(1+r)x.X(1+r)]š –1 = 19+r)*-1 2. Geometric average stock returns 3. APR versus EAR:...
***Would especially like help with #25***
Use the table below for Problems 22 - 25. The debt and equity columns describe different possible capital structures A-G for Company XYZ. The Method 1-3 columns indicate the WACC for capital structures A-G and are consistent with the Modigliani and Miller Propositions. Structure Total Assets 8000 Equity Method 1 16.13% 13.84% 13.20% 12.24% 11.00% 11.20% 13.00% Method 2 5.49% 6.28% 9.47% 9.72% 9.60% 10.73% 13.00% Method 3 13.00% 13.00% 13.00% 1200 1000 800...
If you an answer only one so please give the answers for B
QUESTION 5 There are two investments available: Vanguard S&P 500 Index Fund (VFINX) and a risk-free asset. The VFINX has an expected return of 12% and the standard deviation of 20%. The risk-free asset offers two rates: the lending rate is 2% while the borrowing rate is 8%. a. (10%) Assuming that investors are maximizing utility function U=E(r)-0.5A02 in making financial decisions, what is the range of...
Use the table below for Problems 22 - 25. The debt and equity columns deseribe different possible capital structures A-G for Company XYZ. The Method 1-3 columns indicate the WACC for capital structures A-G and are consistent with the Modigliani and Miller Propositions EquityMethod Structure Total Assets 8000 4000 1200 1000 800 600 400 400 400 400 400 400 400 400 1 16.13% 13.84% 13.20% 12.24% 1 1.00% 11 .20% 13.00% Method 2Method 3 13.00% 13.00% 13.00% 13.00% 13.00% 13.00%...
Use the table below for Problems 22 - 25. The debt and equity columns describe different possible capital structures A-G for Company XYZ. The Method 1-3 columns indicate the WACC for capital structures A-G and are consistent with the Modigliani and Miller Propositions Structure Total Assets 8000 4000 1200 1000 800 600 400 Equity 400 400 400 400 400 400 400 Method 1 16.1 3% 13.84% 13.20% 12.24% 1 1.00% 11 .20% 13.00% Method 2Method 3 13.00% 13.00% 13.00% 13.00%...
QUESTION 2 Use the table below to answer the following question(s). Shirley Templeton is a real estate agent for Paralol Realty. Shirley is given the responsibility to manage potential customers for 5 of the Realty's bungalows. These 5 bungalows are situated in close proximity. In order to make traveling easier, Shirley decides to move to a location closer to the 5 bungalows. The table below gives the location (X and Y coordinates) of the 5 bungalows along with the number...
Use the table below to answer the following question(s) by invoking the binary constraints on the variables using the standard Solver. Below is the spreadsheet for a project selection model: IA Project Selection Model 1 B Data 4 Project 1 Project 2 Project 3 Project 4 Project 5 Available Resources 15 $160,000 $250,000 $175,000 $150,000 $225,000 16 Expected Return (NPV) Cash requirements Personnel requirements $45,000 $70,000 $28,000 $52,000 $55,000 $175,000 7 10 9 Model 10 111 Project selection decisions 12...
QUESTION 1 Use the table below to answer the following question(s). Shirley Templeton is a real estate agent for Paralol Realty. Shirley is given the responsibility to manage potential customers for 5 of the Realty's bungalows. These 5 bungalows are situated in close proximity. In order to make traveling easier, Shirley decides to move to a location closer to the 5 bungalows. The table below gives the location (X and Y coordinates) of the 5 bungalows along with the number...
QUESTION 1 Use the information below to answer the following question(s). Consider the following spreadsheet for an outsourcing decision model. utsourcing Decision Model Data Manufactured in-house ixed cost Unit variable cost 60,000 130 Purchased from supplier Unit cost 10 165 12 Demand volume 13 14 Model 15 16 1,000 otal manufacturing cost Total purchased cost 18 19 Difference 20 Decision We assume that the production (demand) volume is normally distributed with a mean of 1,000 and a standard deviation of...
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