12-2. Suppose the market portfolio has an expected return of 10% and a volatility
of 20%, while Microsofts stock has a volatility of 30%.
a. Given its higher volatility, should we expect Microsoft to have an equity
cost of capital that is higher than 10%?
Monte Carlo Simulation
Monte Carlo simulation in traditional capital budgeting use repeated random
sampling from probability distributions of crucial primary variables underlying cash flows
to arrive at output distributions or risk profiles of probabl
Kohers Inc. is considering a leasing arrangement to finance some manufacturing tools
that it needs for the next 3 years. The tools will be obsolete and worthless after 3 years.
The firm will depreciate the cost of the tools on a straight-line basis over t
Solutions to Questions and Problems
NOTE: All end of chapter problems were solved using a spreadsheet. Many problems require
multiple steps. Due to space and readability constraints, when these intermediate st
Chapter 2, Solutions
Cornett, Adair, and Nofsinger
CHAPTER 2 REVIEWING FINANCIAL STATEMENTS
1. List and describe the four major financial statements.
The four basic financial statements are:
1. The balance sheet reports a firms assets, liabi
Report on the Status of the Yang-Mills
Millenium Prize Problem
Michael R. Douglas
Yang-Mills Existence and Mass Gap: Prove that for any
compact simple gauge group G, quantum Yang-Mills theory of R4
exists and has a mass gap > 0.
As explained in
Definition of capital: borrowed sums or equity
which the firm's assets are acquired and its
operations are funded.
When does a firm need capital?
New or start up companies
QUANTUM YANGMILLS THEORY
ARTHUR JAFFE AND EDWARD WITTEN
1. The Physics of Gauge Theory
Since the early part of the 20th century, it has been understood that the description of nature at the subatomic scale requires quantum mechanics. In quantum mechanics,