Author: Anonymous

Stocks D and T each have an expected return of 12.5%, a beta…

Stocks D and T each have an expected return of 12.5%, a beta of 1.0, and a standard deviation of 35%.  The risk-free rate of return (rRF) is 5.5%.  Assume that the market is in equilibrium.  The returns on the two stocks have a correlation of 0.75.  Portfolio P has 35% in Stock D and 65% in Stock T.  Which of the following statements is CORRECT?  

Favorite Chocolates & Sweets (FCS) manufactures and distribu…

Favorite Chocolates & Sweets (FCS) manufactures and distributes fine chocolates and candies.  FCS is considering the development of a new line of sugar-free truffles.  FCS’s CFO has collected the following information regarding the proposed project, which is expected to last 3 years: What is the proposed project’s NPV?

You have $8,000,000 in a portfolio consisting of 10 stocks w…

You have $8,000,000 in a portfolio consisting of 10 stocks with $800,000 invested in each.  The portfolio’s beta is 1.50.  You plan to sell Stock A in your portfolio and use the proceeds to buy Stock B.  Stock A has a beta of 1.25, while Stock B’s beta is 0.50.  After this transaction, what will be the portfolio’s new beta? (Hint:  Make sure to carry out your calculation to 4 decimal places.)  

1.  This is a timed exam (see posted time limit)  2.  Please…

1.  This is a timed exam (see posted time limit)  2.  Please answer each question, save your answer before moving on to the next one. If you skip a question, you can not go back to it and will not get credit. 3.  This exam is closed book/closed notes….so do not use them or you may be subject to actions listed in the Academic Integrity section of the syllabus!  4.  Save all of your answer in your word processor so in the event that you are booted from the exam…..you still have your answers and do not have to start over.  In the event you are booted from the exam, call me right away so that I can fix the issue.