Questions from Corporate Finance

Q: Calculate the annual arithmetic mean and geometric mean return on the following

Calculate the annual arithmetic mean and geometric mean return on the following security, and state which method is more appropriate for the situation: purchase price = $30; first‐year dividend = $5;...

Q: Calculate the ex post standard deviation of returns for the following:

Calculate the ex post standard deviation of returns for the following: 50 percent, 30 percent, 20 percent, 35 percent, 55 percent.

Q: An investor owns a portfolio of $60,000 that

An investor owns a portfolio of $60,000 that contains $15,000 in stock A, with an expected return of 12 percent; $20,000 in bonds, with an expected return of 8 percent; and the rest in stock B, with...

Q: As an analyst for FinCorp Inc., you are responsible for many

As an analyst for FinCorp Inc., you are responsible for many firms, including ADFC. Currently you have a “hold” recommendation on ADFC. 19 The current price of ADFC is $140. You have conducted an exte...

Q: FinCorp Inc. has been using the services of San Bernadino Brokerage

FinCorp Inc. has been using the services of San Bernadino Brokerage Company (SBBC) for the past six months. SBBC has informed FinCorp Inc. that the geometric mean monthly return was 6 percent and that...

Q: You wish to combine two stocks, Encor and Maestro, into

You wish to combine two stocks, Encor and Maestro, into a portfolio with an expected return of 16 percent. The expected return of Encor is 2 percent with a standard deviation of 1 percent. The expecte...

Q: Why is it logical to believe that international diversification will provide benefits

Why is it logical to believe that international diversification will provide benefits to investors?

Q: Calculate the covariance and correlation coefficient between the two securities of a

Calculate the covariance and correlation coefficient between the two securities of a portfolio that has 60 percent in stock X (with an expected return of 40 percent and a standard deviation of 12 perc...

Q: Using the following information, calculate the expected return and the standard

Using the following information, calculate the expected return and the standard deviation of ABC.

Q: Five years ago, your dad bought 250 shares of ABC for

Five years ago, your dad bought 250 shares of ABC for $6 each and 300 shares of DEF for $7.50 each. He has now given you all his shares, when both stocks are trading at $8. What are the weights of the...