If there is a 20% chance we will get a 16% return, a 30% chance of getting a 14% return, a 40% chance of getting a 12% return, and a 10% chance of getting an 8% return, what is the expected rate of return? O a. 15% b. 14% c. 12% O d. 13%

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c. If the required return is 10 percent, what is the NPV for Project A? NPV d. If the required return is 10 percent, what is the NPV for Project B? NPV

Consider the following information: Security A Security B Security C Security D 20% 25% 40% 15% Security E 35% Which security should have the higher expected return? Multiple Choice Standard Deviation O Security E Security B Security D L4 Beta 1.75 1.20 1.55 85 1.15 Drott 5 of 35 # Next >

M102LON/JAN 3. Security A has the following probability distribution of returns: Scenario Probability Return 1 0.1 15% 2 0.8 25% 0.1 35% What is the variance for Security A? a. 0.002 b. 0.020 С. 0.200 d. 0.300 3.

If the minimum attractive rate of return is 14%, which alternativeshould be selected?

touch O 0 "|44% 17:08 20. Assume you have the following table. If you know that the Risk free rate (rf) is 6%, what is the reward to volatility (Sharpe Ratio)? Scenario Probability НPR Good 0.3 10% Average 0.5 9% Bad 0.2 -10% A) (6.44%) B) 7.5% C) 3.5% D) 6.2% E) None of the above This is a required question 21. Carson Inc.'s manager believes that economic conditions during the next year will be strong, normal, or weak, and she thinks that the firm's returns will have the probability distribution shown below. What's the standard deviation of the estimated returns? * Economic Conditions Probability Return 22.00/

Suppose that you found the probabilities and expected NPVs of 3 scenarios for a timing option: E(NPV)       probability $0.15             0.30 $10.35         0.50 $42              0.20 1. What is the expected NPV of the timing option? Show your work. 2. Suppose, that the expected NPV of the project if proceeding today is $14. Should the project be delayed based on your finding in part 1 or should the management implement it today? Briefly explain.

A project that has a positive NPV discounted at a rate of 15% would have an IRR of A. More than 15% B. 10% C. 0% D. Less than 15%

Assume you are risk-averse and have the following three choices Expected Value $ 2,200 Standard Deviation $ 1,440 Project A B C 2,730 2,250 Project A B C 1,960 1,490 a. Compute the coefficient of variation for each. Note: Round your answers to 3 decimal places. Coefficient of Variation b. Which project will you select? O Project A O Project B O Project C