Assignment 7 Solutions
Question 1
a) Initially, Udipi Enterprises is 100% equity financed. Therefore, the value of the firm, V, is
simply the value of the equity, which is 25,000,000 $10 = $250,000,000. By MM
Proposition I, the value of the firm after the
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Understanding the
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2010 Smart Woman Securities.
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Last Seminar R
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Analyzing Companies
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Last Semin
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Finding and
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Last Sem
70391 - Finance
Course Summary
70391 Finance Fall 2016
Tepper School of Business
Carnegie Mellon University
c
2016
Chris Telmer. Some content from slides by Bryan Routledge. Used with permission.
12.04.2016 15:14
Questions
:1: What is finance? (see pictur
Finance (70391)
Fall 2016
Problem Set 9
CAPM
1. Risk premium on a gamble. A stock costs 30. It pays 40 with probability 0.62
and 20 with probability 0.38. The risk-free interest rate is 1%. The market risk
premium is 8%.
(a) What is the stocks beta?
(b) W
Finance (70-391)
Fall 2016
Midterm Examination #1, Fall 2016
Time allowed = 80 minutes
Admissible materials:
Writing instruments. Calculator. Nothing else.
Computers, cell phones, smart-phones, clever-phones, PDAs and any other
such electronic devices
Finance (70-391)
Fall 2016
Midterm Examination #2, Fall 2016
Time allowed = 80 minutes
Admissible materials:
Writing instruments. Calculator. Nothing else.
Computers, cell phones, smart-phones, clever-phones, PDAs and any other
such electronic devices
Finance (70-391)
Spring 2016
Midterm Examination #2, Spring 2016
Time allowed = 80 minutes
Admissible materials:
Writing instruments. Calculator. Nothing else.
Computers, cell phones, smart-phones, clever-phones, PDAs and any other
such electronic dev
Finance (70391)
Fall 2016
Problem Set 10
Leverage and Capital Structure
1. Two questions about the eect of financial leverage.
(i)
(eect of leverage on a financial portfolio)
There are two states of nature and two assets. Asset 1 is a riskless bond.
It co
Finance (70391)
Fall 2016
Problem Set 1
Financial Analysis of Retail Firms
Use the financial statement data from the spreadsheet that has been provided. Do
the following calculations for each of the three retail firms, for each of the years for
which data
Finance (45-720)
Assignment
Problem Set 2
Value Creation Using the NPV Rule
Emerson Electric is considering the acquisition of Yggdrasil, a Norwegian firm that is
a provider of flow assurance and production optimization software. The price would
be $1.5 b
Finance (70391)
Fall 2016
Problem Set 8
Diversification and Portfolio Choice
This problem set is a continuation of that from last week. References to data are
references to the Stock 1 and Stock 2 data.
1. Now we will specify a particular statistical mode
Finance (70-391)
Spring 2016
Final Examination, Spring 2016
Time allowed = 3 hours
Admissible materials:
Writing instruments. Calculator. Nothing else.
Computers, cell phones, smart-phones, PDAs and any other such electronic
devices are not permitted.
Finance (70-391)
Fall 2015
Midterm Examination #1: Morning Section
Time allowed = 75 minutes
Admissible materials:
Writing instruments. Calculator. Nothing else.
Computers, cell phones, smart-phones, clever-phones, PDAs and any other
such electronic d
Midterm Examination #2, Fall 2015
2
Question 1 (35 points, 8 for (a), 9 for each of (b-d)
Moments for rates of return are as follows.
Riskless Bond
Stock 1
Stock 2
Correlation
Expected Return
0.05
0.12
0.08
Standard Deviation
0.14
0.16
0.30
(a)
You can on
Midterm Examination #2, Spring 2016
4
Question 3 (35 points, 9 for (a-c), 8 for (d)
The distribution of asset returns between today and next year is
Distribution of Asset Returns
State of Nature
1
2
Probability
0.3
0.7
Asset 1
0.06
0.06
Asset 2
0.05
0.25
Midterm Examination #2, Spring 2016
4
Question 3 (35 points, 9 for (a-c), 8 for (d)
The distribution of asset returns between today and next year is
Distribution of Asset Returns
State of Nature
1
2
Probability
0.3
0.7
Asset 1
0.06
0.06
Asset 2
0.05
0.25
Chapter 13
Analyzing Financial Statements
Use of Financial Statements to
evaluate a company's financial
performance and condition
C1
Ability to meet
short-term
obligations
Ability to make
profit
Emphasis on 4 Areas
Liquidity
Solvency
Market
Profitability
Chapter 24
Capital Budgeting and
Investment Analysis
P1
Payback Period
The
The payback
payback period
period of
of an
an investment
investment
is
is the
the time
time expected
expected to
to recover
recover
the
the initial
initial investment
investment am
Syllabus
Course:
Semester:
Instructor:
Email:
Office:
Office hours:
Webpage:
Finance (70-391)
Spring 2017
Jim Albertus
[email protected]
GSIA 335
Mondays 9:30 a.m.-11:30 a.m., and open door policy
https:/cmu.instructure.com/
Class hours:
Section A:
Section
Due Oct 6th at the beginning of class.
ERM Fall 2016
Name: _
Exercise 2: Displays of Research Findings
For each data set, do all of the following:
a. Create a Table that displays the mean and variance of each variable.
b. Create a Figure that displays a b
Due February 6
Assignment 1
Question 1
You win a lottery with a prize of $1.5 million. Unfortunately, the prize is paid in 10 equal annual
installments. The first payment is next year. How much is the prize really worth? The discount rate
is 8%.
Question
Solutions to Problem set VI
Investment Analysis 70-492
Fall 2014
Problem 1 A six-year government bond with face value $1000 makes annual coupon payments of 5% and offers a yield of 3%. Suppose that one year
later, the bond still yields 3%. What return has
Solutions to Problem set VII
Investment Analysis 70-492
Fall 2014
Problem 1 Consider the purchase of a combination of two European puts
and a European call with the same expiration date. Assume that the call
costs $5, the put costs $6, and the exercise pr
Solutions to Problem set V
Investment Analysis 70-492
Fall 2014
Problem 1 A 30-year U.S. Treasury bond with a face value of $1,000
pays a coupon of 8% (4% of face value every six months). The semiannually
compounded interest rate is 8% (a six-month discou
Solutions to Problem set
Investment Analysis 70-492
Problem 1 This question deals with the optimal portfolio choice for an
investor with mean-variance preferences in a world with two risky securities,
A and B, and a risk free asset, F. Security A offers a
Solutions to Problem set I
Investment Analysis 70-492
Problem 1 Investor X has $200,000 available in period 0 (now) to support
consumption in periods 0 (now) and 1 (next year). He wants to consume
exactly the same amount in each period. The interest rate
Solutions to Problem set I V
Investment Analysis 70-492
Problem 1 A portfolio management organization analyzes 60 stocks and
constructs a mean-variance efficient portfolio using only these 60 securities.
Assume that the risk free rate is known.
a. How man