Questions from Corporate Finance

Q: See Table 2.5 showing financial statement data and stock price

See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. a. What were Mydeco’s gross margins each year? b. Comparing Mydeco’s gross marg...

Q: Assume the risk-free rate is 4%. You are a

Assume the risk-free rate is 4%. You are a financial advisor, and must choose one of the funds below to recommend to each of your clients. Whichever fund you recommend, your clients will then combine...

Q: Assume all investors want to hold a portfolio that, for a

Assume all investors want to hold a portfolio that, for a given level of volatility, has the maximum possible expected return. Explain why, when a risk-free asset exists, all investors will choose to...

Q: In addition to risk-free securities, you are currently invested

In addition to risk-free securities, you are currently invested in the Tanglewood Fund, a broad based fund of stocks and other securities with an expected return of 12% and a volatility of 25%. Curren...

Q: You have noticed a market investment opportunity that, given your current

You have noticed a market investment opportunity that, given your current portfolio, has an expected return that exceeds your required return. What can you conclude about your current portfolio?

Q: There are two ways to calculate the expected return of a portfolio

There are two ways to calculate the expected return of a portfolio: either calculate the expected return using the value and dividend stream of the portfolio as a whole, or calculate the weighted aver...

Q: The Optima Mutual Fund has an expected return of 20%, and

The Optima Mutual Fund has an expected return of 20%, and a volatility of 20%. Optima claims that no other portfolio offers a higher Sharpe ratio. Suppose this claim is true, and the risk-free interes...

Q: You are currently only invested in the Natasha Fund (aside from

You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 14% with a volatility of 20%. Currently, the risk-free rate of interest is 3.8%. You...

Q: Calculate the Sharpe ratio of each of the three portfolios in Problem

Calculate the Sharpe ratio of each of the three portfolios in Problem 41. What portfolio weight in Hannah stock maximizes the Sharpe ratio? Data from Problem 41: You are currently only invested in t...

Q: Returning to Problem 38, assume you follow your broker’s advice and

Returning to Problem 38, assume you follow your broker’s advice and put 50% of your money in the venture fund. a. What is the Sharpe ratio of the Tanglewood Fund? b. What is the Sharpe ratio of your n...