If the average range of the market's return (as measured by the S&P 500) is +/- 9%

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Question:

If the average range of the market's return (as measured by the S&P 500) is +/- 9% for a given period, and X-Co's Beta is 1.6, what is its expected range for that period?

5. If X-Co has a Beta of 1.6, and the risk-free rate is 2.0%, and the average market risk premium is 7%, what is X-Co's estimated required return per the CAPM?

6. You bought a $1,000 face value bond on January 23 that pays a coupon rate of 4%/year paid semiannually on January 1 and July 1. How much accrued interest did you pay to the seller?

7. A p-e ratio is an opinion of 2 things. In a few words, what are they?

8. You bought X-Co's new convertible bond which has a conversion ratio of 8. When are you in the money?

9. Estimate the current market value of X-Co stock you expect to pay a dividend of $1.82/share next year and grow at a 4%/year rate in the future. You believe the cost of equity is 7.9%.

11. You expect X-Co will pay a dividend of $76 million and repurchase $98 million of its common shares next year (Year 1) with both expected to grow 6% in Year 2 and 7% in Year 3. If you expect the company to be sold for $11 billion at the end of Year 3, and you have calculated the cost of equity to be 8.4%, what do you estimate the value of the company's net worth to be now? (First draw a timeline. Assume all cash flows are at the end of the year.)

12. Using the WACC as the discount rate in determining the NPV of a large investment project rests on 2 big assumptions. Very briefly, what are they?

13. If the NPV is positive, what do you know about the IRR?

14. Calculate the MIRR for a project where the WACC is 6%: Invest: $97 today plus $30 at the end of year 2. Returns: $33, 38, 43, and 45 to be received at the end of years 1, 2, 3, and 4 respectively. (Draw a timeline and express your answer as a % carried to 1 decimal place.)

15. What was X-Co stock's annual total return (ATR) for 2021 if you bought it for $20 on 1/1; received a $.40 dividend on 3/1 when the stock closed at $18; received a $.40 dividend on 9/1 when the stock closed at $20; and on 12/31 sold the stock for $22? (Express your answer as a percent carried to 1 decimal place.)

16. What are the two main reasons using Standard Deviation to quantify a portfolio's risk can be misleading or worse?