Business Finance Help for College and University Students

Standard deviation for a portfolio of common stock

The standard deviation of the rate of return for Jasper products is 6%, while for Headline Industries it is 12%. If the correlation between their returns is 0.74, what is the standard deviation of a portfolio composed of 80% Jasper and 20% Headline common stock?

Calculating the standard deviation of a portfolio composed of two assets.

The standard deviation of the rate of return for Lind Distributing is 18% while that for Henry Manufacturing is 22%. If the correlation between their returns is -0.25, what is the standard deviation of a portfolio composed 70% of Lind and 30% of Henry common stock?

IPO

a. What is the average underpricing of this sample of IPOs? b. What is the average initial return on my "portfolio" of shares purchased from the four IPOs I bid on? Calculate the average initial return weighting by the amount of money invested in each issue. c. Why have I performed so poorly relative to t ...continues

Profit and DOL

A project has fixed costs of $1,000 per year, depreciation charges of $500 a year, revenue of $6,000 a year, and variable costs equal to two-thirds of revenues. a. If sales increase by 5 percent, what will be the increase in pretax profits? b. What is the degree of operating leverage of this project? c. Conf ...continues

Finding growth rate

I want to determine the cost of equity captial for a particular company (Nordstrom JWN) using the Dividend Growth Model Approach. I want to use the formula: Re=D1/Po + g. I have found that their last annual dividends were .40 and Po is $20.81 However, I have searched and due to the fact that I really don't know what I am loo ...continues

Calculate the standard deviation of a two-stock portfolio.

Let X and Y be two stocks with the following features: - Stock X Expected Return 14% - Stock Y Expected Return 18% - Stock X Standard Deviation 40% - Stock Y Standard Deviation 54% - Correlation(X,Y) = .25 - Mean is 15.6% What is the standard deviation for a portfolio with 60% in stock x and 40% invested in sto ...continues

8 Finance Quetsions

1. Interest rates on 1-year Treasury securities are currently 5.6 percent, while 2-year treasury securities are yielding 6 percent. If the pure expectations theory is correct, what does the market believe will be the yield on 1- year securities 1 year from now? 2. Assume that at the beginning of 1981 the expected inflation r ...continues

1) Rate of return, growth rate, return on new investments on stocks. 2) Coupon rate, current yield, and yield of maturity of a bond 3) Coupon rate on a bond so that it sells at par

Please see the attachments. 1) Eastern Electric currently pays a dividend of about $1.64 per share and sells for $27 a share. a. If investors believe the growth rate of dividends is 3 percent per year, what rate of return do they expect to earn on the stock? b. If the investors' required rate of return is 10 ...continues

Net Present Value - Sleep-Easily Ltd

Net Present Value - See the attached file. Sleep-Easily Ltd manufactures high quality, branded orthopaedic furniture in Manchester. The products are made in limited numbers and for limited production periods of usually no more than six years. All products are sold on the Web, supported by speciality magazine advertising. A s ...continues

Rate of interest on gold loan vs rate of interest on cash loan

A bank offers a corporate client a choice between borrowing cash at 11% per annum and borrowing gold at 2% per annum. (If gold is borrowed, interest must be repaid in gold. Thus, 100 ounces borrowed today would require 102 ounces to be repaid in one years time.) The risk-free interest rate is 9.25% per annum and storage costs ar ...continues