A portfolio has three stocks - - 240 shares of Yahoo (YHOO), 110 Shares of General Motors (GM), and 30 shares of Standard and Poor's Index Fund (SPY). If the price of YHOO is $30, the price of GM is $30, and the price of SPY is $130, calculate the portfolio weight of YHOO and GM. O 50.0%, 22.9% O 27.5%, 42.4% 47.5%, 24.1% O 15.0%, 13.8%
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- Suppose instead Larry decides to buy 100 shares of NanoSpeck stock. Which of the following statements are correct? Check all that apply. O C The price of his shares will rise if NanoSpeck issues additional shares of stock. NanoSpeck earns revenue when Larry purchases 100 shares, even if he purchases them from an existing shareholder. Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Larry's shares to decline.Large Company owns 35% of the common stock of Tiny Co. and uses the equity method to account for the investment. In 2025, Tiny reported an income of $260,000 and paid dividends of $90,000. There is no amortization associated with the investment. In 2025, how much income should Large Co. recognize related to this investment? O $90,000. O $91,000. O $122,500. O $31,500. O $59,500.2. Chelsea Fashion has a current annual dividend of $0.80 a share next year. The market price of the stock is $22.40, and the growth rate is 5 percent. What is the firm's cost of equity?* O 8.57 percent O None of the above O 8.75 percent O 7.58 percent 8.24 percent
- IS-MP Analysis: Interest Rates and Output — End of Chapter Problem The federal funds rate is 4%, and inflation is 3%. The real interest rate that people can borrow money at is 1.5%. a. Given the data provided, move the MP curve to the appropriate position. Real interest rate (%) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -5 -4 -3 -2 -1 0 1 2 3 MP curve 4 544 By implementing any hedge t of Solect one: O a you should try to make money on both sides of the transaction: that way you moke morey coming and going. O b you should spend at least as much time working the hedge as working the underlyling deal itselt. O c. you should agree to anything your banker puts in front of your face. O a your losses on one side should about equal your gains on the other side. 45 Which of the following is NOT one of the key factors that have motivated Honda to make investments in America? t of Select one: O a Direct investments in America might hove been an integral part of Honda's overail corporate strategy designed to bolster its competitive position vis-ò-vis its domestic rivals, such as Toyoto and Nissan. O b Honda wanted to export its US.-manufactured cars to other markets as well. O . Honda wanted to increase employment in America. O a Honda wanted to bypass trade barriers imposed on Japanese automobile manufacturers.Suppose Caroline is choosing how to allocate her portfolio between two asset classes: risk-free government bonds and a risky group of diversified stocks. The following table shows the risk and return associated with different combinations of stocks and bonds.CombinationFraction of Portfolio in Diversified StocksAverage Annual ReturnStandard Deviation of Portfolio Return (Risk)(Percent)(Percent)(Percent)A 0 1.50 0B 25 3.00 5C 50 4.50 10D 75 6.00 15E 100 7.50 20There is a relationship between the risk of Caroline's portfolio and its average annual return.Suppose Caroline currently allocates 75% of her portfolio to a diversified group of stocks and 25% of her portfolio to risk-free bonds; that is, she chooses combination D. She wants to reduce the level of risk associated with her portfolio from a standard deviation of 15 to a standard deviation of 5. In order to do so, she must do which of the following? Check all that apply. Sell some of her stocks and use the proceeds to purchase…
- According to modern portfolio theory, the idea that investors with different indifference curves will hold the same portfolio of risky securities is a result of O a. the separation theorem O b covariance O c. the normal distribution assumption O d. diminishing marginal utility of incomeSubmit All Question 28 of 30 Suppose Jon decides to purchase either a long-term Treasury bond or a share of stock from a company in the Dow Jones Industrial Average. Assume that either one will behave similarly to the average security in their class, and ignore the effect of market conditions. Which security is more likely to lose most of its value in the next year after Jon purchases it? O the probabilities of major loss are the same they are both guaranteed to increase in value the stock the bond Based on historical returns, which security is likely to grow more significantly in value after Jon purchases it? the bond 8:27 PM a 46°F E 4) 12/15/202A Company's stock currently pays a dividend of $5 dollars per year and you expect that dividend to grow by 3% every year, forever, such that next year you expect the dividend to be 5.15, to be 5.3045 the year after that, and so on. If your discount rate is 9%, a fair price for this stock today is_____.If your discount rate were to fall to 7%, holding all else the same, the fair price of the stock would increase to_________.
- 8. Risk and return Suppose Caroline is choosing how to allocate her portfolio between two asset classes: risk-free government bonds and a risky group of diversified stocks. The following table shows the risk and return associated with different combinations of stocks and bonds. Combination A BUDW C E Fraction of Portfolio in Diversified Stocks (Percent) 0 25 50 75 100 Average Annual Return (Percent) 3.50 7.50 11.50 15.50 19.50 Standard Deviation of Portfolio Return (Risk) (Percent) 0 5 10 Sell some of her stocks and place the proceeds in a savings account O Sell some of her bonds and use the proceeds to purchase stocks Accept more risk Sell some of her stocks and use the proceeds to purchase bonds 15 20 As the risk of Caroline's portfolio increases, the average annual return on her portfolio Suppose Caroline currently allocates 25% of her portfolio to a diversified group of stocks and 75% of her portfolio to risk-free bonds; that is, she chooses combination B. She wants to increase the…The table uses the standard deviation of the portfolio's return as a measure of risk. A normal random variable, such as a portfolio's return, stays within two standard deviations of its average approximately 95% of the time. Suppose Valerie modifies her portfolio to contain 75% diversified stocks and 25% risk-free government bonds; that is, she chooses combination D. The average annual return for this type of portfolio is 13%, but given the standard deviation of 15%, the returns will typically (about 95% of the time) vary from a gain of to a loss ofYou have decided to invest in an open-end mutual fund. You are currently looking at a fund-Washington Premier Fund-in your newspaper. The fund is quoted as: Name NAV Net Chg YTD %RET 36.25 0.15 6.95 Assume that today's opening price of Washington Premier Fund equals yesterday's closing price. If you wanted to make your investment first thing this morning, then you should expect to pay for each share of since it Yesterday, each share of sold for $35.95 $43.50 $36.25 $34.44 $0.15 less $0.15 more $6.95 less $6.95 more If you had $8,000 available to invest, you could purchase than it did the day before, and offers a return of 294 368 assesses a 0.15% fee 276 shares of. is a no-load fund charges a 6.95% fee 221 Your evaluation of the Washington Premier Fund is made easier by the fact that: your investment choices are limited. mutual funds are careful to explicitly state their investment objectives. a mutual fund broker will select a customized mix for you. 0.15% 36.25% 6.95% for the year.