Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Responses should be at least 75 words for each question.
1) Identify two reasons for the existence of different valuations produced by the Price-Earnings Method. Which would you use and why?
2) Briefly distinguish each of the three forms of market efficiency from each other. Which do you think best represents US markets?
3) Stock ABC has a beta of 1.3, a risk-free rate of 2.25%, and a market return of 9%. What is the expected return for this stock?
4) Company QRS just paid a dividend of $1.35. It is expected this dividend will grow at a constant rate of 3% indefinitely. What is the price of this stock if the required return is 7%?
5) You make the following investments in stocks: $4,000 in IBM, $6,000 in F, and $9,000 in MSFT. The betas for the stocks are IBM: 0.97; F: 1.05, and MSFT: 1.3. What is the portfolio beta?
6) Why would a bank be interested in a long hedge?
7) Briefly describe the characteristics of a single stock future. What type of investor might be interested in these?
8) You decided to buy Treasury bill futures contracts with a quoted price was 95-60. When you close this position, the quoted price was 94-50. Determine the profit or loss per contract, ignoring transaction costs.
9) You decided to sell Treasury bill futures contracts with a quoted price was 93-40. When you close this position, the quoted price was 92-65. Determine the profit or loss per contract, ignoring transaction costs.
10) You sell S&P 500 stock index futures that specified an index of 1,750. When you close this position, the index specified by the futures contract was 1,830. Determine the profit or loss, ignoring transaction costs.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more