FIN3316 Final
In MatLab, what is the difference between "./" and "/"?
"./" will perform an element-by-element right array division. ('A ./ B' will divide each element of A by the corresponding element of B, and their sizes must be the same) "/" will perform matrix right division, in which the two matrices must have the same number of columns. ('A/B' will return only one result, instead of all in the matrix)
Use the following income statement and balance sheet information: What is the firm's change in net working capital for 2018?
$-75,000
You buy a $1,000 par bond with 15 years to maturity and a semi-annual coupon of 6.4% at a price of $1,150. If the yield to maturity of the bond remains constant, at what price will you be able to sell it in three years?
$1,128.13
You invest $300 at the beginning of each month into your account for the next 40 years and earn 10% interest for the first 20 years, then earn 8% for the next 20 years. How much will you have accumulated at the end of 40 years?
$1,309,615
Bob's Burgers needs a business loan. The bank is offering a 15-year loan at 5.65% APR. If Bob can afford to pay $15,000 per month, what is the largest loan he can get?
$1,818,038.63
Dunder-Mifflin had Cash Flow from Assets of $150,000 with an Operating Cash Flow of $210,000 and Capital Spending of a negative $85,000. What was their Change in Net Working Capital?
$145,000
What is the firm's operating cash flow for 2018?
$275,000
Krueger Industrial Smoothing wants net income of $850,000 next year. Their tax rate is 22% and they have interest expense of $650,000. Their depreciation is $500,000 and fixed operating costs are $300,000. If cost of goods sold run 35% of sales and they plan to pay out $200,000 in dividends, what sales level will be necessary for the firm to reach its goal?
$3,907,298
You have $500,000 to invest in two mutual funds. Fund A has an expected return of 18% and fund B has an expected return of 10%. How much must you invest in each fund to have an overall expected return of 15%?
$312,500 in A and $187,500 in B
Vandelay Industries has current liabilities of $135,000 with a quick ratio of 0.6 and a current ratio of 2.5. If they sell out their inventory 10 times a year and Cost of Goods Sold run 60% of sales, what is their sales level?
$4,275,000
Use the following information regarding Krueger Industrial Smoothing to answer the question: Sales = 6,500,000; Total Asset Turnover = 1.35; Debt to Assets = 40%; Profit Margin = 7.5%; Inventory Turnover = 15; Current Ratio = 2.5 If Krueger has 24 days worth of sales in receivables, what is their accounts receivable balance?
$427,397
Krueger Industrial Smoothing expects annual sales of $2,350,000. How much will they increase their average accounts receivable balance if they relax their credit standards causing their Days Sales in Receivables to increase from 18 to 25 days?
$45,068
Dunder-Mifflin had sales of $830,000, operating costs of 43 percent of sales, interest expense of $145,000, depreciation of $315,000, dividends of $85,000 and a tax rate of 22%. What was their operating cash flow for the year?
$470,218
Stock Z trades at a price of $43 and is expected to pay a dividend of $1.25, next year. If the beta of the stock is 1.8 with a risk-free rate of 3% and a market risk premium of 8%, what price will the stock have to reach next year to provide your required return?
$49.23
What are the monthly payments for a $30,000 loan over five years at 3.85% APR?
$550.47
If you expect a stock be priced at $80 in one year and pay a dividend of $1.85, what is the most you would be willing to pay for the stock today if you require a return of 13%?
$72.43
A $1,000 par bond with an 3.5% semi-annual coupon has a twelve-year maturity and trades at a yield of 6.4%. What should be the price of this bond?
$759.64
You find a $1,000 par bond with a 4.5 percent annual coupon and 12 years to maturity trading at a yield of 6.8%. How much will you have to pay to purchase this bond?
$815.36
Sunrise Coffee just borrowed $160,000 to build a new shop. The mortgage loan is for 25 years at an APR of 8.45% with equal monthly payments. How much interest will be paid during the final 4 years?
$9,482
Suzie wishes to withdraw $55,000 each month for 30 years. She expects to earn an average rate of return of 5.65 percent. How much will she need in her account today to accomplish her goal?
$9,528,168.73
Calculate the return for each period, below (expressed as a %, rounded to two decimal places e.g. X.XX%) Date Adj. Close Monthly Return 10/1/2019 81.85 11/1/2019 84.50 (1) ________________ 12/1/2019 75.33 (2) ________________ 1/1/2020 78.44 (3) ________________
(1) 3.24% (2) -10.85% (3) 4.13%
Calculate the return for each period, below (expressed as a %, rounded to two decimal places e.g. X.XX%) Date Adj. Close Monthly Return 10/1/2019 61.18 11/1/2019 65.09 (1) ________________ 12/1/2019 68.45 (2) ________________ 1/1/2020 61.08 (3) ________________
(1) 6.39% (2) 5.16% (3) -10.77%
Year 3-month T-bill rate CPI 1993 3.13 146.3 1994 5.76 150.1 1995 5.29 155.4 Assuming the inflation rate for 1993 is 1.46%, what is the real rate of interest?
(1.0313/1.0146)-1 = 1.65% 1.65%
Year 3-month T-bill rate CPI 1993 3.13 146.3 1994 5.76 150.1 1995 5.29 155.4 Given the chart above, what is the inflation rate for 1994?
(150.1/146.3)-1 = 2.597% 2.597%
Year 3-month T-bill rate CPI 1993 3.13 146.3 1994 5.76 150.1 1995 5.29 155.4 Given the chart above, what is the inflation rate for 1995?
(155.4/150.1)-1 = 3.53% 3.531%
You purchased a stock last year priced at $85. The stock paid a dividend of $3.20 and is currently priced at $62. What return did you earn on the stock?
-23.29%
Suppose a stock has an average annual return of 10% and a standard deviation of 20%. If the returns of the stock are normally distributed, then 95% of the stock's returns will be between _____% and _____%.
-30 ; 50 {If the stock's returns are normally distributed, then 95% of them will fall within 2 standard deviations of the mean. In this case, -2 standard deviations is -2*20%=-40% and +2 standard deviations is 2*20%=40%. So 95% of the returns will fall between -30% (10%-40%) and 50% (10%+40%).}
Name at least two ways to calculate the total interest paid over the life of a loan.
1. Using the =SUM() function in Excel for all the interest payments throughout the life of the loan. 2. Using the =CUMIPMT() function in Excel.
Currently you have $6,000 in a portfolio with a beta of 1.4. If you invest an additional $4,000 in a stock, what will the beta of the stock have to be to make your portfolio beta equal to 1.24?
1.0
If the real rate is 2% and the rate of inflation is 5%, what is the nominal rate? Note: use the precise formula - the one that requires multiplication.
1.02*1.05-1 = 7.1% 7.10%
You have $30,000 invested in stock A with a beta of 0.6, $70,000 in stock B with a beta of 1.6, and $60,000 in stock C with a beta of 2.6. If you add $40,000 of stock D with a beta of 1.7, what will be the new beta of the portfolio?
1.77
You have $30,000 invested in stock A with a beta of 0.6, $70,000 in stock B with a beta of 1.6, and $60,000 in stock C with a beta of 2.6. What is the beta of this portfolio?
1.79
Which one of the following 10-year bonds is the least sensitive to changes in market interest rates if each has a 5% annual coupon?
10% YTM
Use the following information regarding Krueger Industrial Smoothing to answer the question: Sales = 6,500,000; Total Asset Turnover = 1.35; Debt to Assets = 40%; Profit Margin = 7.5%; Inventory Turnover = 15; Current Ratio = 2.5 What is Krueger's Return on Assets?
10.13%
Five years ago, Dunder-Mifflin. issued 13-year, $1,000 par bonds with a 7.5 percent semiannual coupon bonds at par. Today, the bonds are priced at $855. What is the yield to maturity on those bonds today?
10.19%
Using a risk-free rate of 3% and a market return of 7% , what will be the required return for a stock with a beta of 1.8?
10.2%
Company A has 340 million shares outstanding with a par value of $1. its current stock price is 33.42. The company has 4 billion in debt and 1.4 billion in cash. What is the company's market capitalization?
11,362.8 million
Use the following probability distribution: Probability Return of A 0.1 -15% 0.4 -6% 0.4 8% 0.1 32% What is the standard deviation for stock A?
12.60%
Company A has 340 million shares outstanding with a par value of $1. its current stock price is 33.42. The company has 4 billion in debt and 1.4 billion in cash. What is the company's enterprise value?
13,962.8 million
In the Numbers1 array (below), what will be the contents of NewNum if I give the command NewNum=Numbers1(3,4)? 1 5 9 13 2 6 10 14 3 7 11 15 4 8 12 16
15
Use the following information regarding Krueger Industrial Smoothing to answer the question: Sales = 6,500,000; Total Asset Turnover = 1.35; Debt to Assets = 40%; Profit Margin = 7.5%; Inventory Turnover = 15; Current Ratio = 2.5 What is Krueger's Return on Equity?
16.88%
You expect inflation to be 3.8% next year. You want to earn a real rate of return of 15.5%. What will you have to earn on your stock investments to reach your goal?
19.3%
You find a $1,000 par bond with a 6.20% semi-annual coupon and five years to maturity trading at a price of $1,175. What is the yield to maturity of this bond?
2.46%
Use the following probability distribution: Probability Return of A 0.1 -15% 0.4 -6% 0.4 8% 0.1 32% What is the expected return for stock A?
2.50%
If a firm has net income of $60,000, a return on assets of 5% and a return on equity of 18%, what is the firm's debt to equity ratio?
2.6
If you invest $25,000 in the bank today, how many years will it take to grow to $115,000 if you have an account paying 7.5% compounded semi-annually?
20.73 years
You recently sold an antique car you owned and valued greatly. However, you needed money and agreed to sell the car at a price of $63,000 to be paid in monthly payments of $2,000 each for five years. What annual interest rate did you charge for financing the sale?
29.01%
Bob's Burgers has bonds outstanding with a $1,000 par value, a 4.5% semi-annual coupon and six years to maturity. If the bonds are currently trading at a price of $930, what is their yield to maturity?
5.9%
A $1,000 par bond with a semi-annual coupon and eight years to maturity trades at a price of $1,200 and a yield to maturity of 3.15%. What is the bond's coupon rate?
6.00%
A $1,000 par bond with a semi-annual coupon and 11 years to maturity trades at a yield to maturity of 4.20% and is priced at $1,192.22. What is the coupon rate of the bond?
6.40%
Three years ago you purchased a $1,000 par bond with a 5% semi-annual coupon and 9 years to maturity at par. Today, you sold the bond at a price of $915. What was the yield to maturity when you sold the bond?
6.75%
A 2-month time account quotes a 7.50% annual percentage rate. What will be its effective annual rate?
7.74%
Your friend bought Bitcoin priced at $231. Four years later she sold it for $6,483. If returns are compounded daily, what was the annual rate of return on her investment?
83.46%
The population of New Braunfels was 36,494 in the year 2000 and 79,152 in 2017. If the population grows at the same rate as the first 17 years of this century, what will the population be three years later, in 2020?
90,740
Johnny Billy Clarissa Judy Height 5'9" 6'2" 5'6" 5'8" Major Finance Management Accounting Finance Minor German French Math Biology What is the lookup function to find Clarissa's minor, assuming "Clarissa" is in cell A1?
=hlookup($A$1,studentinfo,4,false)
(values: Average of...) Return Alpha Treynor Sharpe Growth 12.88524742 5.107032417 13.40419431 0.518858565 International 9.204629465 1.617220598 9.511754055 0.39008819 Sector 15.40811876 6.253230159 14.69287157 0.485581136 Value 10.85642289 1.844022914 9.660516463 0.552935805 In your own words, describe what a fund's alpha is. Which fund type had the best average alpha during the time period in the table?
A fund's Alpha is the excess return of an investment compared to a risk-adjusted benchmark index. 'Sector' had the best average alpha because the highest number refers to the best performing fund.
Which of the pairs of assets on the below correlation matrix would give you the highest portfolio standard deviation, assuming all three stocks have the same standard deviation? ABC DEF GHI ABC 1 DEF 0.78 1 GHI 0.45 0.22 1
ABC and DEF would give you the highest portfolio standard deviation.
Which one of the following statements is true for two annuities with the same payment amount, frequency, and time if Annuity A is ordinary and Annuity B is an annuity due? Assume both annuities have the same interest rate.
Annuity B has both a higher present value and a higher future value than Annuity A
The amount of systematic risk present in a specific risky asset relative to that in an average risky asset is measured by the:
Beta coefficient
Bond A has a seven-year maturity with a 5% annual coupon and a yield of 6%. Bond B has a 12-year maturity with a 5% annual coupon and a yield of 6%. If both bonds have the same par value, what must be true about the two bonds?
Bond A is more valuable than Bond B
A 5-year U.S. Treasury bond has a yield of 2.4%, while a 10-year AAA corporate bond has a yield of 5.6%. The primary cause(s) of the difference in yield between the two bonds is likely... A. Default-risk premium B. Interest-rate risk premium
Both A and B
Year 3-month T-bill rate CPI 1993 3.13 146.3 1994 5.76 150.1 1995 5.29 155.4 Given the chart above, what is the inflation rate for 1993?
Cannot be determined from information given. (You can't calculate inflation rate for 1993, because you don't have 1992's CPI)
If a firm's current ratio is 1.8 while the industry average is 1.2, how would the firms shareholders and creditors feel about this?
Creditors would be happier than shareholders
Given the following correlation table, which of the pairs of stocks would have the most curve in the graph of standard deviation? ABC DEF GHI ABC 1 DEF 0.78 1 GHI 0.45 0.22 1
DEF and GHI
Which of the pairs of assets on the below correlation matrix would give you the lowest portfolio standard deviation, assuming all three stocks have the same standard deviation? ABC DEF GHI ABC 1 DEF 0.78 1 GHI 0.45 0.22 1
DEF and GHI would give you the lowest portfolio standard deviation.
Dell's cash conversion cycle is negative. Which of the following is true?
Dell has longer to pay its bills than it takes to sell its merchandise and collect for the sale.
Suppose a stock has an average annual return of 10% and a standard deviation of 20%. If the stock's returns are positively skewed, will the frequency of returns below 10% be greater than, equal to, or less than 50%?
Greater than. (In a normal distribution, the median is equal to the mean; the median is the value for which 50% of the observations are more and 50% are less. In a positively skewed distribution the median is below the mean, so more than 50% of the observations are less than the mean.)
Which of the following will decrease the future value of a lump sum investment? I. Decreasing the interest rate II. Decreasing the amount of the lump sum investment III. Increasing the time period IV. Increasing the interest rate
I and II only
Which of the following statements is correct?
If a risky security is correctly priced, its expected risk premium will be positive.
Suppose you wanted to calculate the average returns and standard deviations of 10,000 stocks. What advantage do you gain from using MatLab instead of Excel to do that?
In MatLab you can use the ':' to refer to either all rows/columns in a Matrix for the formulas, so you don't have to list all 10,000 individually, or select all of them in an array, like you would have to in Excel, thus saving you a lot of time.
In Project 5, you did almost everything in Matlab that you did in Projects 2 through 4 in Excel. What extra thing did you do in Project 4, and what did it teach you?
In Project 4, we learned how to use the Scenario Solver to find the asset weights that will produce a minimum variance portfolio using various levels of expected return. Our result cells were the expected return and standard deviation, and we learned how they fluctuate with different the levels of expected return.
Which one of the following will decrease the present value of a fixed future amount? Assume the interest rate is a positive value.
Increase in the compounding frequency
Is the data on the below histogram normally distributed? If not, what do you think is the main problem?
It does not appear to be normally distributed. The main problem is skewness. (Not. Its most obvious problem is skewness, though it looks like it has kurtosis as well.)
What does "Column Input Cell" mean on the dialogue box to create a data table?
It means that the data being used to create corresponding outcomes are in a column (on the left side of the table), not a row. The cell you reference is the one that you want to change according to the data in each cell of the table.
What does "Row Input Cell" mean on the dialogue box to create a data table?
It means that the data being used to create corresponding outcomes are in a row (at the top of the table), not a column. The cell you reference is the one that you want to change according to the data in each cell of the table.
You find a bond with a semi-annual coupon of 5% and a yield of 8.5%. What must happen to the price of this bond as it nears maturity if the yield remains constant?
It must rise
What is the advantage of using a dropdown menu instead of just typing in your stock names?
It's really useful for data validation, so people don't put unexpected inputs in your spreadsheet.
If a stock is underpriced, what must be true about the stock?
Its expected return exceeds its required return
Johnny Billy Clarissa Judy Height 5'9" 6'2" 5'6" 5'8" Major Finance Management Accounting Finance Minor German French Math Biology Suppose I use the following lookup function on the above table, which I've named studentinfo: =hlookup($A$1,studentinfo,3,false) If cell A1 contains Billy, what value will the lookup function return?
Management
Risk averse investors will try to...
Minimize risk for a given return.
Stock A has a beta of 1.1 and an expected return of 10.2%, Stock B has a beta of 1.4 and an expected return of 12.0%. If the risk-free rate is 3% and the market risk premium is 7%, which should you add to a portfolio with a beta of 0.8?
Neither stock A, nor B
How can prices change constantly in an efficient market?
New information changes expected and/or required returns requiring traders to buy or sell
The risk premium that compensates investors for the risk of not being able to easily sell a bond is called the... [Inflation premium, Default-risk premium, Interest-rate risk premium, Market risk premium]
None of the above
If a firm increases its dividend payout what will be the effect on the firm's net income, net cash flow, and Cash Flow from Assets? [Net income will increase, while net cash flow and Cash Flow from Assets will decrease; Net income and net cash flow will fall, while Cash Flow from Assets will increase; Net income and Cash Flow from Assets will fall, while net cash flow won't change; All three measures will increase]
None of the above will occur - (net income and net cash flow will fall, cash flow from assets won't change)
When managers fail to act in ways that best serve the owners of the firm, the situation is referred to as... [the manager problem, the shareholder problem, the finance problem, the corporation problem]
None of the above.
PREREQ. EXAM
PREREQ. EXAM
Suppose you have two portfolios of two assets each. Portfolio A has a standard deviation of 0.35 and Portfolio B has a standard deviation of 0.15. Which portfolio most likely has a bigger difference between the ending value and the FV @ arithmetic average and why?
Portfolio A most likely has a bigger difference between the ending value and the FV at arithmetic average because it has a higher standard deviation than Portfolio B.
Suppose you have two portfolios of two assets each. Portfolio A has a standard deviation of 0.35 and Portfolio B has a standard deviation of 0.15. Which portfolio most likely has a bigger difference between the geometric average return and the expected return (arithmetic average) and why?
Portfolio A most likely has a bigger difference between the geometric average return and the expected return because it has a higher standard deviation than Portfolio B.
QUIZ 1
QUIZ 1
QUIZ 10
QUIZ 10
QUIZ 11
QUIZ 11
QUIZ 12
QUIZ 12
QUIZ 2
QUIZ 2
QUIZ 3
QUIZ 3
QUIZ 4
QUIZ 4
QUIZ 5
QUIZ 5
QUIZ 6 & 7
QUIZ 6 & 7
QUIZ 8
QUIZ 8
QUIZ 9
QUIZ 9
Which option is more valuable if you can earn 7% on your money?
Receiving $5 million per year for the next 15 years with the first payment today
Suppose you calculated the following in Excel. Which of the following asset returns can be considered normally distributed? (Note: choose all correct answers.)
S&P and JKS (The ones whose skewness and/or kurtosis measures fall outside the range considered normal for Excel are not considered normally distributed. That range is -1 to +1, so BKS and JCI are not normally distributed by our definition.)
Security A has a standard deviation of 20% and a correlation to your existing portfolio of -0.7. Security B has a standard deviation of 18% and a correlation to your existing portfolio of 0.8. If both stocks have the same expected return, which would be a better addition to your portfolio?
Security A
If Security A's standard deviation is lower than Security B's, but Security A's beta is HIGHER than Security B's, it is likely true that:
Security A has less unsystematic risk than Security B.
If Security A's standard deviation is higher than Security B's, but Security A's beta is LOWER than Security B's, it is likely true that:
Security A has more unsystematic risk than Security B.
(values: Average of...) Return Alpha Treynor Sharpe Growth 12.88524742 5.107032417 13.40419431 0.518858565 International 9.204629465 1.617220598 9.511754055 0.39008819 Sector 15.40811876 6.253230159 14.69287157 0.485581136 Value 10.85642289 1.844022914 9.660516463 0.552935805 If you're trying to choose between two bond funds, which of the three measures is most appropriate?
The Average of Sharpe Ratio would be most appropriate.
(values: Average of...) Return Alpha Treynor Sharpe Growth 12.88524742 5.107032417 13.40419431 0.518858565 International 9.204629465 1.617220598 9.511754055 0.39008819 Sector 15.40811876 6.253230159 14.69287157 0.485581136 Value 10.85642289 1.844022914 9.660516463 0.552935805 In your own words, describe what a fund's Sharpe ratio is. Which fund type had the best average Sharpe ratio during the time period in the table? Why?
The Sharpe ratio is the risk premium per unit of unsystematic risk, and it measures the performance of the portfolio compared to the risk taken. 'Value' had the best average Sharpe ratio because the highest number refers to the best performing fund.
(values: Average of...) Return Alpha Treynor Sharpe Growth 12.88524742 5.107032417 13.40419431 0.518858565 International 9.204629465 1.617220598 9.511754055 0.39008819 Sector 15.40811876 6.253230159 14.69287157 0.485581136 Value 10.85642289 1.844022914 9.660516463 0.552935805 In your own words, describe what a fund's Treynor ratio is. Which fund type had the best average Treynor ratio during the time period in the table?
The Treynor ratio compares the portfolio risk premium to the systematic risk of the portfolio (beta), and it measures the return per unit risk. 'Sector' had the best average Treynor ratio because the highest number refers to either a higher portfolio return or a lower portfolio beta.
In words, what does the Return on Equity measure?
The amount of profit per dollar of shareholder investment
What is a stock's beta (in words)?
The amount of volatility, or systematic risk, of a stock or portfolio, compared to the market.
An agency issue is most apt to develop when:
The control of the firm is separated from the firm's ownership
In the project, you calculated standard deviation of a portfolio in two ways. Describe them.
The first way, we used the =STDDEV.P() function in Excel. Then, we checked the figures by using the long and complicated standard deviation formula.
Given the following correlation table, which of the pairs of stocks would have the most curve in the graph of expected return? ABC DEF GHI ABC 1 DEF 0.78 1 GHI 0.45 0.22 1
The graph of expected return is linear.
Over the life of an amortized loan, what happens to the interest payment (in other words, how does the interest portion of the first payment compare to the interest portion of the last payment)?
The interest paid on an amortized loan decreases as time elapses; the first payment is the highest and the last payment is the lowest.
Over the life of an amortized loan, what happens to the principal payment (in other words, how does the principal portion of the first payment compare to the principal portion of the last payment)?
The principal paid on an amortized loan increases as time elapses; the first payment is the lowest and the last payment is the highest.
Suppose you run Crystal Ball on Portfolio A. The certainty value you calculate with the geometric average return being the lower bound and the arithmetic average return being the upper bound is 25%. What is the probability of receiving a return higher than the arithmetic average or lower than the geometric average?
The probability of receiving a return higher than the arithmetic average or lower than the geometric average is 75%.
Suppose a stock has an average annual return of 10% and a standard deviation of 20%. Suppose the stock's returns have high positive kurtosis. How would this affect the probability of getting returns outside (lower than the bottom and higher than the top) the range you gave in the previous answer?
The probability would be higher because the distribution of returns has fatter tails than the normal distribution. (There would be a higher probability of getting returns outside that range because kurtosis means more extreme values than you expect if the distribution is normal.)
Which of the following will be true about the return and standard deviation of a portfolio?
The return of a portfolio will be the weighted average of the returns in the portfolio, but the standard deviation will be less than the weighted average of the standard deviations in the portfolio.
Suppose I want to use solver to create a portfolio of 100 assets that has the lowest possible standard deviation given that I want my expected return to be 10%. I set a constraint that the portfolio weights sum to 1. What is my second constraint?
The second restraint is setting r = 0.1
If a firm's current ratio is above the industry average while its quick ratio is below the industry average, what must be true about the firm's inventory?
They carry a larger proportion of inventory than other firms in the industry
If a firm has a positive Cash Flow from Assets, and a negative Operating Cash flow, what must they have done if there was no change in net working capital?
They must have sold fixed assets
Dell's times interest earned ratio is 1.3. In words, what does that mean?
Times interest earned measures a company's ability to pay its debt obligations. A ratio above one shows that Dell is able to pay its interest obligations.
Suppose I want to create a portfolio of 100 assets. What's the easiest way to calculate the standard deviation of the portfolio?
Using solver, you can create a portfolio of 100 stocks. You can use the covariance matrix to calculate the portfolio standard deviation with the =SQRT(MMULT()) functions, inputting the W cells and the W' Sigma cells in the table into the formula. The easiest way, in general, is using the =STDDEV.P() function
What is the relationship (as shown by your graph in the project) between FV and Interest Rate?
With a higher interest rate, you will have a higher FV; with a lower interest rate, you will have a lower FV.
What is the relationship (as shown by your graph in the project) between PV and Interest Rate?
With a higher interest rate, you will have a lower PV; with a lower interest rate, you will have a higher PV.
What is the relationship (as shown by your graph in the project) between FV and Term To Maturity?
With a higher term to maturity, you will have a higher FV; with a lower term to maturity, you will have a lower FV.
What is the relationship (as shown by your graph in the project) between PV and Term To Maturity?
With a higher term to maturity, you will have a lower PV; with a lower term to maturity, you will have a higher PV.
Using a risk-free rate of 3% and a market return of 7%, If your $500,000 portfolio has a beta of 1.1, should you add $50,000 of a stock with a beta of 1.8 and an expected return of 11.0%?
Yes
Use a risk-free rate of 3% and a market return of 7%. You have a portfolio with $10,000 invested in Stock A with a beta of 0.9, $20,000 in Stock B with a beta of 1.8, and $20,000 in Stock C with a beta of 2.0. What is the beta and required return of the portfolio?
beta=1.7, return = 9.8%
In the following MatLab program, what is the name of the file that contains my source data? clc; clear all; load datafile.mat %Find Beta CoVarI=cov(RetsF(:,:)); CovWI=CoVarI(2:6,1);
datafile.mat
Which of the following actions by Dell management will increase its gross profit margin?
decrease the cost of the components it uses to manufacture computers without sacrificing quality
Suppose you wanted to create a column vector that looks like this: 5 5 5 5 5 What would be the easiest way to do it in MatLab?
fiveVec=ones(5,1)*5
When a bond's yield to maturity is lower than the bond's coupon rate, the bond:
is selling at a premium
The best goal for a manager in a firm to pursue should be to?
maximize the market value of the firm
Suppose I want to select the number 6 from the Numbers1 array (below). Which ONE of the following commands will do that? 1 5 9 13 2 6 10 14 3 7 11 15 4 8 12 16
num6=Numbers1(2,2)
When calculating the standard deviation of a portfolio using the more complicated formula, the three inputs are weight of each asset in the portfolio, standard deviation of each asset in the portfolio, and the correlation coefficient between the assets in the portfolio. What happens to the portfolio standard deviation when the correlation coefficient (ρ) DECREASES?
portfolio standard deviation decreases
When calculating the standard deviation of a portfolio using the more complicated formula, the three inputs are weight of each asset in the portfolio, standard deviation of each asset in the portfolio, and the correlation coefficient between the assets in the portfolio. What happens to the portfolio standard deviation when the correlation coefficient (ρ) INCREASES?
portfolio standard deviation increases
In the following MatLab program, what is the name of the file that contains my source data? clc; clear all; rawP=xlsread('prcStk15.xlsx'); %Calculate returns pIni=rawP(:,2:end); Rets=zeros(size(pIni,1)-1,size(pIni,2)); pFinal=zeros(size(pIni,1),size(pIni,2)); pFinal(1:end-1,:)=pIni(2:end,:); tempRets = pIni ./ pFinal -1; RetsF=Rets; RetsF(1:end,:)=tempRets(1:end-1,:)
prcStk15.xlsx
What is an annuity?
recurring payments that happen at equal intervals
The required return of a security is determined by the
risk of the security and other opportunities available.
If the rating of a bond is upgraded from CC to CCC, what will happen to the price and required yield of the bond?
the price will rise and the yield will fall
Suppose I want to use solver to create a portfolio of 100 assets that has the lowest possible standard deviation given that I want my expected return to be 10%. What should I put in "By changing variable cells?" Use words, not cell references.
the row of W' contains the variable cells
Dell's profit margin is lower than that of its competitors. What are some possible reasons (check all that apply)?
yes- Dell's cost of goods sold are higher as a percentage of sales. no- Dell's sales are lower. yes- Dell spends a lot on selling, general and administrative expenses compared to its competitors. no- Dell pays less in interest than its competitors.
Suppose I have an array called Numbers1 created by an xlsread command in MatLab that looks like this: 1 5 9 13 2 6 10 14 3 7 11 15 4 8 12 16 I want to do an operation on a subset of that array called Numbers2, consisting of columns 2-4 of Numbers 1. Which of the following statements will do that? Check all that apply.
yes- Numbers2=Numbers1(:,2:end) no- Numbers2=numbers1(:,2:end) yes- Numbers2=Numbers1(:,2:4) yes- Numbers2=Numbers1(1:4,2:4) no- Numbers2=Numbers1(2:end,2:4)