Personal Finance: Turning Money into Wealth (7th Edition) (Prentice Hall Series in Finance)
7th Edition
ISBN: 9780133856439
Author: Arthur J. Keown
Publisher: PEARSON
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Question
Chapter 7, Problem 7DC3
Summary Introduction
Case summary:
CE has graduated from a public university in 4 years and she is ready to stat her career as a teacher of mathematics in the northern Virginia. Her salary is $37,500. She received several scholarship and grant for the college in each semester she depended on understudy advances to meet the cost of educational cost and other instructive costs. She has collected $27,850 in the student loan debt. She is ready to live in her town as a teacher. C is surveying her present and future money related circumstances and has a few inquiries concerning understudy advances
Adequate information:
Her salary is $37,500 per month.
Student loan debt is $27,850.
To identify:
Whether C is eligible for the deferment or forbearance if she has enrolled in the graduate program.
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Please no spreadsheet workings.
Question 5 1
The common shares of Almond Beach Inc, have a beta of 0.75, offer a
return of 9%, and have an historical standard deviation of return of
17%. Alternatively, the common shares of Palm Beach Inc. have a beta
of 1.25, offer a return of 10%, and have an historical standard
deviation of return of 13%. Both firms have a marginal tax rate of
37%. The risk-free rate of return is 3% and the expected rate of
return on the market portfolio is 9½%%.
1. Which company would a well-diversified investor prefer to invest
in? Explain why and show all calculations.
2. Which company Would an investor who can invest in the shares of
only one firm prefer to invest in? Explain why.
Use the following template to organize and present your results:
Theoretical CAPM Actual offered
Almond Beach Inc.
Palm Beach Inc.
prediction for
expected return
(%)
return (%)
Standard
deviation of
return (%)
Beta
Comments on the diversified investor's
choice
Comments on the individual investor's
choice
solve this question by using appropriate methodology and true answer.
Chapter 7 Solutions
Personal Finance: Turning Money into Wealth (7th Edition) (Prentice Hall Series in Finance)
Ch. 7 - Prob. 1PACh. 7 - Prob. 2PACh. 7 - Prob. 3PACh. 7 - Prob. 4PACh. 7 - Prob. 5PACh. 7 - Prob. 6PACh. 7 - Prob. 7PACh. 7 - Prob. 8PACh. 7 - Prob. 9PACh. 7 - Prob. 10PA
Ch. 7 - Prob. 11PACh. 7 - Prob. 12PACh. 7 - Prob. 13PACh. 7 - Prob. 14PACh. 7 - Prob. 15PACh. 7 - Prob. 1DC1Ch. 7 - Prob. 2DC1Ch. 7 - Prob. 3DC1Ch. 7 - Prob. 4DC1Ch. 7 - Prob. 5DC1Ch. 7 - Prob. 6DC1Ch. 7 - Prob. 7DC1Ch. 7 - Prob. 8DC1Ch. 7 - Prob. 1DC2Ch. 7 - Prob. 2DC2Ch. 7 - Prob. 3DC2Ch. 7 - Prob. 4DC2Ch. 7 - Prob. 5DC2Ch. 7 - Prob. 1DC3Ch. 7 - Prob. 2DC3Ch. 7 - Prob. 3DC3Ch. 7 - Prob. 4DC3Ch. 7 - Prob. 5DC3Ch. 7 - Prob. 6DC3Ch. 7 - Prob. 7DC3Ch. 7 - Prob. 8DC3Ch. 7 - Prob. 9DC3Ch. 7 - Prob. 10DC3Ch. 7 - Prob. 11DC3Ch. 7 - Prob. 12DC3
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