Questions from Corporate Finance

Q: If returns of S&P 500 stocks are normally distributed,

If returns of S&P 500 stocks are normally distributed, what range of returns would you expect to see 95% of the time? Base your answer on Figures 11.3 and 11.4.

Q: You observe a portfolio for five years and determine that its average

You observe a portfolio for five years and determine that its average return is 12% and the standard deviation of its returns is 20%. Can you be 95% confident that this portfolio will not lose more th...

Q: Using the data in Critical Thinking Question 6, calculate a

Using the data in Critical Thinking Question 6, calculate a. The expected overall payoff of each bank. b. The standard deviation of the overall payoff of each bank.

Q: Using the data in the table below, calculate the return for

Using the data in the table below, calculate the return for investing in this stock from January 1 to December 31. Prices are after the dividend has been paid.

Q: How much of the return in Problem 1 came from dividend yield

How much of the return in Problem 1 came from dividend yield and how much came from capital gain? In Problem 1 You bought a stock one year ago for $50 per share and sold it today for $55 per share. I...

Q: You have just purchased a share of stock for $20.

You have just purchased a share of stock for $20. The company is expected to pay a dividend of $0.50 per share in exactly one year. If you want to earn a 10% return on your investment, what price do y...

Q: The fact that Cola Co. and Gas Co. have a

The fact that Cola Co. and Gas Co. have a correlation of 0.6083, calculate the volatility (standard deviation) of a portfolio that is 55% invested in Cola Co. stock and 45% invested in Gas Co. stock....

Q: Suppose Johnson & Johnson and the Walgreen Company have the expected returns

Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 22%. For a portfolio that is equally invested in Johnson & John...

Q: You have a portfolio with a standard deviation of 30% and

You have a portfolio with a standard deviation of 30% and an expected return of 18%. You are considering adding one of the two stocks in the table below. If after adding the stock you will have 20% of...

Q: Your client has $100,000 invested in stock A.

Your client has $100,000 invested in stock A. She would like to build a two-stock portfolio by investing another $100,000 in either stock B or C. She wants a portfolio with an expected return of at le...