NPV - What is the standard deviation of returns of stock A?...

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FINA 365: C ORPORATE F INANCIAL A NALYSIS Handout #0 Mathematical Background Instruction: Write down your answers with necessary steps and deductions. All your work must be clear and concise. Also, you must highlight your final answer. Name: Section . 1. (5 points) Solve for r a. b. c. d. +…
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e. 2. (2 points) Solve for n 3. (1 points) Evaluate: =? 4. (2 points) X is a random variable which has two realizations: 5 with probability ½ and 7 with probability ½. What is E(x)? 5. (4 points) The following numbers are the returns of stock A in the past 6 days: 1, 2, 1.5, 0, 3, 1.5 What is the average returns of stock A?
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Unformatted text preview: What is the standard deviation of returns of stock A? 6. (1 points) What is max(5,10) ? What is min(-10,-5) ? 6. (5 points) Imagine you have won the state lottery! There are two alternative payouts. #1 $ 10 million one year from now #2 $ 20 million two years from now What alternative should you choose if the interest rate is: 6.1 0% 6.2 10% #1 NPV = 9,090,909.10 #2 NPV= 12,418,426.46 6.3 20% #1 NPV = 8,333,333.33 #2 NPV= 8,037,551.44 6.4 What discount rate makes the two alternatives equally attractive to you? 18.921%...
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NPV - What is the standard deviation of returns of stock A?...

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