Finance - Four Misc. Problems
KnowledgeCats
1. What is the NPV, IRR, PBP and PI of the following set of cash flows? Discount rate 10%.
Year Cash Flow
0 $ -26300
1 8400
2 11300
3 16500
2. Your portfolio has provided you with returns of 8.6 percent, 14.2 percent, -3.7 percent, and 12.0 percent over the past four years, respectively. What are the arithmetic average return and the geometric average return for this period?
3. Show the effect on price (increase, decrease, no effect) for each of the following situations under three form of market efficiency (5 Points)
Situations | Weak | Semi-strong | Strong |
The WSJ publishes that Landmark Inc. declared a dividend of $1 per share |
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Landmark Inc. board members decide in a closed door meeting to open a new factory in Taiwan |
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Your broker in NYSE tells you that Landmark Inc. CEO is going to declare retirement |
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4.Given the following information, calculate the portfolio return, portfolio risk (standard deviation), and portfolio beta.
| Stock A | Stock B |
Return | 0.07 | 0.10 |
Risk (Standard Deviation) | 0.12 | 0.18 |
Correlation (RA, RB) | 0.4 | |
$ Invested | 10,000 | 30,000 |
Beta | 0.8 | 1.12 |
12 years ago
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