Additionally, alternative 2 provides the lowest coefficient of variation as well as the lowest standard deviation. The level of risk given the expected return is high and offers stability when compared to the other alternatives.
8-22
a. Stock B, stock A, stock C
b. If the market portfolio has a return of 12%, then stock a will realize a return of just below 12% or .096%. Stock b will have a return of 1.4 * 12% or .168%. Stock c will have a return of -.30 * 12% or -.036%
c. If the market portfolio has a negative return of 5%, then stock a will realize a return of -.04%. Stock b will realize a return of -.07%. Stock c will realize a return of -.015%
d. If the stock market were about to experience a decline, then the stock to add to the portfolio would be the stock with the lowest or negative beta, which is -.30 or stock c.
e. A major stock market rally would entail a pursuit of stock b, which has a beta of 1.40
9-4
Approximating the before-tax cost of debt - Rd =
I + 1,000 -- net proceeds from the sale of debt (bond)
n (# of years till bond maturity)
(net proceeds from the sale of debt) + 1,000
2
Bond A -- Bond E
9-13
WACC
The weighted average cost of capital
The Hi-Tech stock is highly volatile and will add a great degree of uncertainty and risk to the portfolio. Whether the stock should be added is a function of the current asset allocation, the investment horizon, the investment goal(s), and the level of risk the investor...
Corporate Finance Tools in Daily Life Many of the concepts associated with corporate finance also have applications in everyday life. A range of corporate finance tools are already used in everyday life, often without realization as corporate finance tools are often an extension of common financial practices. More complex corporate finance tools may also provide a great deal of potential to enhance daily life financial management. By looking at task associated
Corporate Finance East Coast Yachts I My time horizon is long-run. I would want a diversified portfolio, but can afford to take the risk of equities. So the first decision is to go with 100% equities. I am not interested in company stock at the moment, because I want a diversified portfolio and I only want liquid securities with values set by the market. The company stock does not meet those criteria. In
Corporate Finance 3a) This depends on the project. b) Better than the company or industry average, whichever is higher. C) Higher than the cost of capital. d) e) over 0. The objection is based on speculation. Since we do not know what the future reinvestment rate is going to be, we must work with the best information we have today. Again, the objection is the same. A complaint that we have less than
Corporate Finance Ratio Liquidity Ratios Current ratio Activity Ratios Inventory turnover Total asset turnover Debt ratios Debt ratio Debt-to-equity ratio Profitability ratios Return on common equity Return on total assets DuPont Analysis The DuPont equation, according to Besley and Brigham (), can be captured as follows: ROE = Net Profit Margin * Total Assets Turnover In a tabular form, this would be: Net profit margin Total assets turnover ROE The current ratios of Jaedan Industries do not differ significantly from the industry ratios for the two years under consideration.
To include: Rangers, Special Forces, Delta Force, Special Air Service, Special Boat Service and Navy SEALs. (Dunnigan, 2010) As a result, many people within the U.S. military and the government will often discuss the valuable services that these companies are providing. Where, private security contractors can bring a wide range of experience with them, in dealing with a host of possible security challenges that could be faced within a
At first, it would seem that debt has more advantages than new equity. However, that is not always the case. The fact is that certain equilibrium between issuing debt and issuing equity has to be found. The cost of debt rises constantly, since the financial risk of a company grows together with the level of debt the company has to face. The cost of debt is the market interest rate
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