Expert Math Help

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Calculate the expected return on stock of Time Saver Inc.:

State of the economy

Probability of the states

Percentage returns

Economic recession

15%

7.6%

Steady economic growth  

50%

4.0%

Boom

Please calculate it

-4.6%

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Q5-2

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Calculate the expected standard deviation on stock:

State of the economy

Probability of the states

Percentage returns

Economic recession

             30%

-3%

Steady economic growth

38%

8%

Boom

Please calculate it

14%

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Q5-3

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The prices for the White Swan Corporation for the first quarter of the last year are given below. Find the holding period return (percentage return) for February.

End of the month

Stock price

January

105.98

February

99.18

March

98.92

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Q5-4

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Mary purchased 100 shares of Sweet Pea Co. stock at a price of $42.14 six months ago. She sold all stocks today for $46.41. During that period the stock paid dividends of $2.13 per share. What is Mary’s effective annual rate?

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Q5-5

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You purchased 250 shares of General Motors stock of at a price of $79.98 two years ago. You sold all stocks today for $82.61. During this period the stock paid dividends of $4.54 per share. What is your annualized holding period return (annual percentage rate)?

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Try to determine the required rate of return on Tilden Woods Corporation’s common stock. The firm’s beta is 1.06. The rate on a 10-year Treasury bond is 3.37 percent, and the market risk premium is 8.03 percent.

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Q6-2

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John invested the following amounts in three stocks:

Security

Investment

Beta

Stock A

$382,637

1.50

Stock B

$252,187

2.32

Stock C

$407,331

1.25

Calculate the beta portfolio.

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Q6-3

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A project has an initial outlay of $1,241. It has a single payoff at the end of year 10 of $7,476. What is the net present value (NPV) of the project if the company’s cost of capital is 9.21 percent?

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Q6-4

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Find the net present value (NPV) for the following series of future cash flows, assuming the company’s cost of capital is 11.50 percent. The initial outlay is $360,616.

Year 1: 158,205

Year 2: 158,839

Year 3: 132,744

Year 4: 194,724

Year 5: 167,165

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Q6-5

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A project has an initial outlay of $1,422. It has a single cash flow at the end of year 4 of $5,534. What is the internal rate of return (IRR) for the project?

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