un XL Session 6L Dashboard xO QuestionG What is the xb Login | bar xM (Alert] Suc -A ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Feeting - Z.M MKT 100 (Section 2.H QuickLaunchSSOer 11 HomeworkSavedHelConsider the following information:State ofProbability ofEconomy State of EconomyRecessionRate of Returnif State Occurs251325Boom75Calculate the expected return. (Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g., 32.16.)Expected return%< Prev4 of 30Next >

Expected return =Summation of Probability of state of economy×Rate of return if state occurs

Consider the following information: State of Economy State of Economy if State Occurs Recession Boom Probability of Rate of Return 25 -13 75 25 Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return %

Consider the following information: State of Economy State of Economy if State Occurs Recession Boom Probability of Rate of Return 25 -13 75 25 Calculate the expected return. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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st K Present value calculation Without referring to the preprogrammed function on your financial calculator, use the basic formula for present value, along with the given discount rate, r, and the number of periods, n, to calculate the present value of $1 in the case shown in the following table. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Opportunity cost, r 4% The present value of $1 is $ Number of periods, n 6 (Round to three decimal places.)
Assume a finite state economy with three assets whose payoff matrix is given by 30 20 50 D = 20 15 35 (a) Suppose that the asset prices are $28, $18, and $47, respectively. Is there an arbitrage opportunity in the market? (b) If the price of the third asset reduces to $46, is there an arbitrage oppor- tunity in the market?
Expected return and standard deviation. Use the following information to answer the questions. State of Economy Probability of State Return on Asset R in State Return on Asset S in State Return on Asset T in State Boom 0.25 0.020 0.270 0.490 Growth 0.35 0.020 0.110 0.280 Stagnant 0.22 0.020 0.140 0.020 Recession 0.18 0.020 −0.030 −0.150 a. What is the expected return of each asset? b. What are the variance and the standard deviation of each asset? c. What is the expected return of a portfolio with equal investment in all three assets? d. What is the portfolio's variance and standard deviation using the same asset weights in part (c)? Hint: Make sure to round all intermediate calculations to at least seven (7) decimal places. a. What is the expected return of asset R? (Round to four decimal…
S Year 0 1 2 3 Cash Flow -$ 9,900 2,300 2,900 5,200 a. What is the profitability index for the cash flows if the relevant discount rate is 6 percent? Profitability index 0.949 0.967 0.875 0.893 0.921 b. What is the profitability index for the cash flows if the relevant discount rate is 16 percent? Profitability index c. What is the profitability index for the cash flows if the relevant discount rate is 23 percent?
Expected return and standard deviation a. What is the expected return of asset J?
Use the information from this table to find the standard deviation for each asset. State of Economy Probability of State Return on Asset J Return on Asset K Boom 30% 5% 24% Growth 40% 5% 12% Stagnant 20% 5% 4% Recession 10% 5% -10%
Calculate the 1. payback period, 2. the net present value to the nearest whole dollar (for example 4500), 3. the internal rate of return to the nearest whole percentage (for example 12), and 4. the modified internal rate of return (to the nearest whole percent, for example 12) Period OH 0 1 2 3 4 5 CF -100,000 25000 50000 50000 3000 1000 WACC 0.125 2 A N A/
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Consider the following information: State of Economy Probability of State of Rate of Return if State Recession Normal Boom Economy .11 .35 .54 Calculate the expected return. Multiple Choice 20.82% 21.86% О 2.53% Occurs -.06 .12 .32
Q10
Consider the following information: Probability of Rate of Return If State of Economy State of Economy State Occurs Recession Normal Boom .20 .45 .35 Expected return Calculate the expected return. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. -.14 .10 .36 %
Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided.) Initial investnent (for tvo hot air balloons) Useful life Salvage value Annual net income generated BBS'a cost of capital $ 340,000 6 yeara $ 48,000 29,920 124 Assume straight line depreciation method is used. Required: Help BBS evaluate this project by calculating each of the following: 1. Accounting rate of return. (Round your answer to 2 decimal places.) 2. Payback period. (Round your answer to 2 decimal places.) 3. Net present value (NPV). (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.) 4. Recalculate the NPV assuming BBS's cost of capital is 15 percent.…

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