Problem 2: Consider the following cash flowsH-10,000 -$10,000 -S10.000$7000S5000$8500M$6000$3500$50002$20003$5000$6200Assume cash flows follow normal distribution and risk-free interest rate of 10%.A. Find the probability that the cash flow at year 2 is less than $3550.B. Find the probability that the PW will be negative.

Part a) E = event of cash flow being less than 3550 Total number of outcomes at year 2 are 3…

Answered: Problem 2: Consider the following cash…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Example 2: Given the following information about ZED Ltd., show the effect of the dividend policy on the market price of its shares, using the Walter's model: = 12% Equity capitalisation rate (K.) Earnings per share (E) Assumed return on investments (r) are as follows: 1) r= 15%
James has an investment worth $175,609.50. The investment will make a special payment of X to James in 1 month from today and the investment also will make regular, fixed monthly payments of $1,440.00 to James forever. The expected return for the investment is 1.23 percent per month and the first regular, fixed monthly payment of $1,440.00 will be made to James in one month from today. What is X, the amount of the special payment that will be made to James in 1 month? An amount less than $58,600.00 or an anmount greater than $179,600.00 An amount equal to or greater than $58,600.00 but less than $88,950.00 An amount equal to or greater than $88,950.00 but less than $146,400.00 An amount equal to or greater than $146,400.00 but less than $176,000.00 O An amount equal to or greater than $176,000.00 but less than $179,600.00 Com SHEMA
Stocks A and B have the following historical returns: Year 2016 2017 2018 2019 2020 a. Calculate the average rate of return for each stock during the period 2016 through 2020. Round your answers to two decimal places. Stock A: % % Stock A's Returns, ra (20.60%) 39.75 17.25 (3.50) 25.00 Stock B: b. Assume that someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would the realized rate of return on the portfolio have been each year? Round your answers to two decimal places. Negative values should be indicated by a minus sign. CV Stock A Stock B's Returns, B (14.30%) 29.80 37.30 (6.60) 11.70 Year 2016 2017 2018 2019 2020 What would the average return on the portfolio have been during this period? Round your answer to two decimal places. Portfolio % c. Calculate the standard deviation of returns for each stock and for the portfolio. Round your answers to two decimal places. Stock B % Portfolio % Stock A % Standard Deviation d. Calculate the coefficient of…
1.The table shows earnings per share of a corporation over a period of 30 years. Year Earnings Year Earnings 1 50.2 16 45.4 33.9 17 35.6 3 20.6 18 30.1 4 25.4 19 25.5 32.9 20 22.4 6. 31.3 21 12.3 7 18.8 22 20.9 8 14.5 23 42.8 9 17.5 24 86.3 10 23.6 25 73.6 11 20.6 26 47.7 12 21.6 27 56.6 13 27.6 28 53.1 14 36.5 29 48.9 15 49.3 30 41.2 e. Estimate earnings when year=28 and year=31
Which of the following statements is TRUE regarding interest rates? O A. The penalty for spending before earning describes the interest rate from the point of view of the debtor. O B. Interest rates in the U.S. were extremely low in the early 1980s because of high maturity premiums. O c. Ceteris paribus, as the frequency of compounding increases, the periodic rate will exceed the EAR by greater and greater amounts. O D. Ceteris paribus, as the frequency of compounding decreases, the EAR will exceed the APR by greater and greater amounts.
Suppose that you have the following payoff table: State of Nature Decision 51 S2 di 250 100 d2 100 -50 150 Suppose that p-0.75 would make you indifferent between a guaranteed payoff of 150 and the lottery. Find your risk premium for the payoff of 150. The answer has no decimals.
4. a. Suppose that betwee 401(k) and your employer 8.3%compounded annually dollar, after 18 years?
The following table lists several corporate bonds issued during the second quarter of 2015. Company AT&T Bank of America General Electric Goldman Sachs Verizon Wells Fargo Time to Maturity (years) 10 10 2 8 7 Annual 3.40 4.00 5.25 6.15 5.15 3.50 Rate (%) If you spent $30,000 on AT&T bonds, how much interest would you earn every 6 months? HINT [See Example 3.] $ How much interest would you earn over the life of the bonds?
The following table lists several corporate bonds issued during the second quarter of 2015. Company AT&T Bank of America General Electric Goldman Sachs Verizon Wells Fargo Time to Maturity (years) 10 10 3 8 7 Annual 3.40 4.00 5.25 6.15 5.15 3.50 Rate (%) If you spent $20,000 on AT&T bonds, how much interest would you earn every 6 months? HINT [See Example 3.] $ How much interest would you earn over the life of the bonds? $ %24
7.31. A financial institution has entered into a swap where it agreed to receive quarterly payments at a rate of 2% per annum and pay the SOFR three-month reference rate on a notional principal of $100 million. The swap now has a remaining life of 10 months. Assume the risk-free rates with continuous compounding (calculated from SOFR) for 1 month, 4 months, 7 months, and 10 months are 1.4%, 1.6%, 1.7%, and 1.8%, respectively. Assume also that the continuously compounded risk-free rate observed for the last two months is 1.1%. Estimate the value of the swap.
A stock price is currently $40. It is known that at the end of 1 year it will be either $48or $32. The risk-free Interest rate is 5% per annum with continuous compounding. What is the value of a portfolio today with a strike price of $527 (use A-0.25) Hint: draw a tree

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