Question:Answer using excel not CHAT GPTJ14X ✓ fxABCDEFGThe information contained in the table below shows the expected return and standard deviation for the market and Treasury Bills.1234Market Data56Treasury BillsS&P 50078Required:910Rate of ReturnStandard Deviation4.25%12.00%0.00%21.00%Using the information in the table above and the varying risk aversions below, please calculate allocations to the risky and risk-freeassets.11 (Use cells A5 to C6 from the given information to complete this question.)1213Risk AversionPercent Allocated to theMarket (S&P 500)Percent Allocated toTreasury Bills144.00152.00161.50Graded WorksheetWorkbook Statistics+

Conclusion:For 𝐴=4.00: Allocate approximately 43.95% to S&P 500 and the remainder to Treasury…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consider the following scenario analysis: Rate of Return Stocks Scenario Bonds Probability 0.20 Recession -6% 18% Normal economy 0.50 19% 11% Boom 0.30 26% 8% a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? O No Ⓒ Yes b. Calculate the expected rate of return and standard deviation for each investment. (Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.) Expected Rate of Standard Deviation Return Stocks 16.1 % % Bonds 9.7 % % c. Which investment would you prefer? Bond Which investment would you prefer? Stock
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Question 10 3-month SA treasury bill rate 2% beta coefficient 0,491289463 market risk premium 8 % What is the cost of retained earnings? Answer 2
Consider the following scenario analysis: Scenario Recession Normal economy Boom Probability 0.20 0.60 0.20 Rate of Return Stocks -7% 22% 33% a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer? Required A Required B Required C Bonds 20% 11% 7% Complete this question by entering your answers in the tabs below. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? Required A Required B >
Suppose your expectations regarding the stock market are as follows: State of the Economy Boom Normal growth Recession Probability 0.3 0.6 0.1 Mean Standard deviation HPR 24.90 % % 41% 24 E (r) E-1P(s)r (s) Var (r) = o² = s-1p(s)[r (s) - E(r)]² SD (r) = o = √Var (r) Required: Use above equations to compute the mean and standard deviation of the HPR on stocks. (Do not round intermediate calculation Round your answers to 2 decimal places.) -18 K
Finance
Problem 7-12 Suppose that there are many stocks In the security market and that the characteristics of stocks A and Bare glven as follows: Expected Standard Stock Return Deviation A 10 48 19 11 Correlation = -1 Suppose that It is possible to borrow at the risk-free rate, rĘ What must be the value of the risk-free rate? (Hint: Think about constructing a risk-free portfollo from stocks A and B.) (Do not round Intermedlate calculations. Round your answer to 3 decimal places.) Risk-free rate
Problem 6-1 Financial Pages (LO1) Consider the table given below to answer the following question. Maturity Coupon Bid Price Asked Price Chg Asked Yield toMaturity (%) 15-02-2020 1.375 98.3281 98.3438 − 0.0078 2.228 15-02-2021 2.25 99.5781 99.5938 0.0313 2.391 15-02-2025 7.625 130.6719 130.6875 0.1094 2.770 15-02-2029 5.25 121.8516 121.9141 0.2344 2.908 15-02-2036 4.5 120.9063 120.9688 0.5313 2.986 15-02-2041 4.75 127.2422 127.3047 0.6641 3.084 15-02-2048 3 97.2656 97.2969 0.7266 3.140 a. What is the current yield of the 2.25% 2021 maturity bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Consider the following portfolio of assets: Loan Weight 1 0.30 2 0.70 Expected returni ம σ2 13% 11% 9.06% 82.0% P12=-0.87 8.72% 76.0% 012-75.0% What is the variance of the portfolio (round to two decimals)? Note: a^2 denotes the square of a. For example, 2^2 = 4, 3^2=9 (0.3)^2*(82.0%) + (0.7)^2*(76.0%) + (0.3) (0.7)(-0.87) (9.06%) (8.72%) = 30.19 (0.3)^2 (82.0%) + (0.7)^2*(76.0%) + 2(0.3) (0.7)(-0.87) (9.06 %) (8.72%) = 15.75 (0.3)^2*(82.0%) + (0.7)^2*(76.0%) + [(0.3) (0.7)]^2 (-0.87) (9.06%) (8.72%) = 41.59 (0.3) (82.0%) + (0.7) (76.0%) + 2(0.3) (0.7)(-0.87) (9.06 %) (8.72%) = 48.93

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