he project is accepted Select one: a. None of the option b. If the profitability index is negative c. If the profitability index is zero d. If the profitability index is greater than one e. if the profitability index is less than one
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- The project is accepted اخترأحد الخيارات a. If the profitability index is zero b. if the profitability index is less than one c. If the profitability index is greater than hundred d. If the profitability index is negative e. None of the option What is the limitation of Traditional approach of Financial Management? اخترأحد الخيارات a. All of the option b. More emphasis on long term problems c. Ignores allocation of resources d. One-sided approachIf the internal rate of return (IRR) of a well-behaved investment alternative is equal to MARR, which of the following statements about the other measures of worth for this alternative must be true? i. PW = 0 ii. AW = 0. Solve, a. I onlyb. II only c. Neither I nor II d. Both I and II.A portfolio manager summarizes the input from the macro and micro forecasters in the following table: Micro Forecasts Asset Stock A Stock B Stock C Stock D Expected Return (%) Beta Deviation (%) 1.6 25 22 21 16 Asset T-bills Passive equity portfolio Residual Standard) 2.2 1.4 1.5 Cost of restriction 50 58 55 43 Macro Forecasts Expected Return (%) 12 18 Standard Deviation (%) 0 30 Calculate the following for a portfolio manager who is not allowed to short sell securities. If allowed to short sell securities, the manager's Sharpe ratio is 0.2476. a. What is the cost of the restriction in terms of Sharpe's measure? (Do not round intermediate calculations. Enter your answer as decimals rounded to 4 places.)
- Hydro Ottawa has two options for upgrading a natural gas power station to meet new government standards. Option 1: Hydro Ottawa will make the upgrades themselves. This is expected to cost $12,700 at the end of each month for 12 years. At the end of the operation (in 12 years) Hydro Ottawa expects to sell all equipment needed for the upgrade for $122,000. Option 2: Pay experienced contractors. This will cost $28,000 up front and $13,900 monthly (at the end of every month) for 15 years. Assume all interest is 3.72% compounded monthly. Round the answers to NPV (Option 1), and NPV (Option 2) to the nearest dollar. Round all other answers to two decimal places where applicable. 1) Find the net present value of option 1: P/Y = C/Y = N = I/Y = PV = PMT= FV = Payments (Cost) GA % Sale of equipment (Residual) GA GA LA %Which of the following is true? Discounted Payback Period is by definition longer than the Non-Discounted Payback Period as long as the discount rate is greater than zero. A project has a positive NPV if its Profitability Index is less than 1. a and b None of the aboveWhich of the following is not a discounted technique Select one: a. Net present value b. Discounted Payback period c. None of the option d. Internal Rate of Return e. Profitability index
- Which of the following statements is correct? A. If the NPV of a project is greater than 0, its PI will equal 0. B. If the IRR of a project is 0%, its NPV, using a discount rate, k, greater than 0, will be 0. C. If the PI of a project is less than 1, its NPV should be less than 0. D. NoneRefer to the following payoff table (values are profit): State of Nature Alternative S1 S2 A1 75 −40 A2 0 100 Prior Probability 0.6 0.4 What is the expected payoff of the decision strategy (i.e. using the EMV/EP criterion)?True or false When the net present value is negative, the present value index will be greater than 1?
- Suppose you want to establish a bullish spread strategy. The are two call options. The first one has X1=$50 and C1=$5. The second one has X2=$42 and C2=$6. When the underlying asset price is S(t)=$45, what is the profit from the strategy? What is the maximum profit of the strategy? What is the minimum payoff of the strategy?An investor is consider four different opportunities, A, B, C, or D. The payoff for each opportunity will depend on the economic conditions, represented in the payoff table below. Economic Condition Investment Poor Average Good Excellent (S1) (S2) (S3) (S4) A 50 75 20 30 B 80 15 40 50 C -100 300 -50 10 D 25 25 25 25 What decision would be made under minimax regret?Think about whether a risk-free asset should earn a risk-premium beyond the risk-free rate. Thinking about that should give you an idea of the beta for a risk-free asset. Or, look again at the CAPM equation: E(Ri)=Rf+βi[E(RM)−Rf] Given this equation, what beta sets the E(R) of the risk free asset equal to the risk-free rate? A) zero B) 0.5 C) 1.0 D) its random