1. A bank is offering 12% compounded quarterly. If you put $100 in an account, how much...
Question:
1. A bank is offering 12% compounded quarterly. If you put $100 in an account, how much will you have at the end of one year? What is the effective annual rate? How much will you have at the end of two years?
2. The Constant Company has just paid a dividend of $0.30 per share. The divided grows at a steady rate of 8% per years. What will the dividend be in 5 years?
3. We have invested in the portfolio below with 50% in Share A, 25% in share B and 25% in Share C. What is portfolio return when the economy is boom? What is the expected return of the portfolio? What is the standard deviation of the portfolio?
Returns
Share A Share B Share C Economy Probability
10% 15% 20% Boom 0.4
8% 4% 0% Bust 0.6
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers