CBERGMAN chapter 5 HMWK

# CBERGMAN chapter 5 HMWK - Chris Bergman Principles of...

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Chris Bergman Principles of Finance SECTION 25049 OPC 004 October 13, 2008 [email protected] Chapter 5 1) a. Expected return of Investment X=12.5% Expected return of Investment Y= 12.36% b. Douglas should recommend X because it has a higher rate of return and equal risk. 10) a. F=4% G= 11% H=2% b. F= 13.38 % G= 22.78% H= 16.37% c. F= 3.35 G= 2.07 H= 8.19 Check H 10-a - i r r ( ) i r r - 2 P r i σ 2 r Asset F 0.40 - 0.04 = 0.36 0.1296 0.10 0.01296 0.10 - 0.04 = 0.06 0.0036 0.20 0.00072 0.00 - 0.04 = - 0.04 0.0016 0.40 0.00064 - 0.05 - 0.04 = - 0.09 0.0081 0.20 0.00162 - 0.10 - 0.04 = - 0.14 0.0196 0.10 0 .00196 0.01790 0 .1338 Asset G 0.35 - 0.11 = 0.24 0.0576 0.40 0.02304 0.10 - 0.11 = - 0.01 0.0001 0.30 0.00003 - 0.20 - 0.11 = - 0.31 0.0961 0.30 0 .02883 0.05190 0 .2278 Asset H 0.40 - 0.10 = 0 .30 0.0900 0.10 0.009 0.20 - 0.10 = 0 .10 0.0100 0.20 0.002 0.10 - 0.10 = 0.00 0.0000 - 0.40 0.000 0.00 - 0.10 = - 0.10 0.0100 0.20 0.002 - 0.20 - 0.10 = - 0.30 0.0900 0.10 0 .009 0.022 0 .1483 11) a. 2010 = 17.6% 2011 = 16.4% 2012 = 16%

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2013 = 15.2%
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## This note was uploaded on 02/02/2009 for the course BUSG 1303 taught by Professor Schwartz during the Fall '08 term at University of Cincinnati.

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CBERGMAN chapter 5 HMWK - Chris Bergman Principles of...

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