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FINC-501 Midterm

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Question;Financial Management, FINC-501(ON-LINE);Mid-2;Instructions;?;Please write legibly all your answers.;?;Please use at least 4 decimal places accuracy.;?;Partial credit will be;given if the procedure is correct but the answer is wrong.;?;The process is graded.;So, the correct answer without supporting work is of little value.;?;Good Luck!;1. You;own a portfolio equally invested in a risk-free asset and two stocks. If one of;the stocks has a beta of 1.65 and the total portfolio is as risky as the;market, what must be the beta of other stock in your portfolio?;2. You;have $100,000 to invest in a portfolio containing Stock X, Stock Y and a;risk-free asset. You must invest all your money. Your goal is to create a;portfolio that has an expected return of 11.22% and that has only 96% of the;risk of overall market. If Stock X has;an expected return of 15.35% and a beta of 1.55, Stock Y has an;expected return of 9.4% and a beta of 0.7 and the risk-free rate is 4.5%, how;much money will you invest in Stock X?;3. Antiques;R Us is a mature manufacturing firm. The Company?s last dividend was $9, but;management expects to reduce the dividend payout by 4% per year indefinitely. The;required rate of return is 11%. What will you pay for a share today?;4. Mau;corporation stock currently sells for $58.32 per share. The market requires a;return of 11.5% on the firm?s stock. If the company maintains a constant 5%;growth rate in dividends, what was the most recent dividend per share;paid on the stock?;5. Stock;R has a beta of 1.5, Stock S has a beta of 0.75. The expected return on an;average stock is 13% and the risk-free rate is 7%. By how much does the;required return on the riskier stock exceed that on the less risky stock?

 

Paper#48157 | Written in 18-Jul-2015

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