(a) How many years will it take an investment of $1,000 to grow to $1,900 if...

 

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(a) How many years will it take an investment of $1,000 to grow to $1,900 if the investment pays 5.5% p.a. compounded every four months? (b) The probabilities of returns from two assets are as follows: [2 marks] Probability Return from Asset A Return from Asset B 40% 17% -5% 60% 10% 14% Determine correlation coefficient between returns of these two assets. [8 marks] (c) For a rapidly growing Japanese company, the growth rate is projected to be 25% for the next three years and 10% for the following two years. At the end of five years, the growth rate is expected to settle to 4% and remain so for the foreseeable future. The company will pay its first dividend of 250 per share two years from now. Assume that the investors' required rate of return for the company's shares is 17%. i. Determine the value of this company's share. [4 marks] If the market price of the share is 2,500 per share, is the share a desirable purchase? Explain. [1 mark] (a) How many years will it take an investment of $1,000 to grow to $1,900 if the investment pays 5.5% p.a. compounded every four months? (b) The probabilities of returns from two assets are as follows: [2 marks] Probability Return from Asset A Return from Asset B 40% 17% -5% 60% 10% 14% Determine correlation coefficient between returns of these two assets. [8 marks] (c) For a rapidly growing Japanese company, the growth rate is projected to be 25% for the next three years and 10% for the following two years. At the end of five years, the growth rate is expected to settle to 4% and remain so for the foreseeable future. The company will pay its first dividend of 250 per share two years from now. Assume that the investors' required rate of return for the company's shares is 17%. i. Determine the value of this company's share. [4 marks] If the market price of the share is 2,500 per share, is the share a desirable purchase? Explain. [1 mark]

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a To find the number of years it will take for an investment of 1000 to grow to 1900 with a compounding period of four months and an annual interest r... View the full answer