Questions from Corporate Finance

Q: Using the data from Problem 17, repeat your analysis over the

Using the data from Problem 17, repeat your analysis over the 1990s. a. Which asset was riskiest? b. Compare the standard deviations of the assets in the 1990s to their standard deviations in the Grea...

Q: What if the last two and a half decades had been “

What if the last two and a half decades had been “normal”? Download the spreadsheet from containing the data for Figure 10.1. a. Calculate the arithmetic average re...

Q: The following table shows the one-year return distribution of Startup

The following table shows the one-year return distribution of Startup, Inc. Calculate a. The expected return. b. The standard deviation of the return.

Q: Consider two local banks. Bank A has 100 loans outstanding,

Consider two local banks. Bank A has 100 loans outstanding, each for $1 million, that it expects will be repaid today. Each loan has a 5% probability of default, in which case the bank is not repaid a...

Q: Using the data in Problem 20, calculate a. The

Using the data in Problem 20, calculate a. The expected overall payoff of each bank. b. The standard deviation of the overall payoff of each bank. Data from Problem 20: Consider two local banks. Ban...

Q: Can a firm with positive net income run out of cash?

Can a firm with positive net income run out of cash? Explain.

Q: Consider the following two, completely separate, economies. The expected

Consider the following two, completely separate, economies. The expected return and volatility of all stocks in both economies is the same. In the first economy, all stocks move together—in good times...

Q: Consider an economy with two types of firms, S and I

Consider an economy with two types of firms, S and I. S firms all move together. I firms move independently. For both types of firms, there is a 60% probability that the firms will have a 15% return a...

Q: Using the data in Problem 23, plot the volatility as a

Using the data in Problem 23, plot the volatility as a function of the number of firms in the two portfolios. Data from Problem 23: Consider an economy with two types of firms, S and I. S firms all...

Q: Explain why the risk premium of a stock does not depend on

Explain why the risk premium of a stock does not depend on its diversifiable risk.