1. Nelson's Landscaping Services just completed a pro forma statement using the percentage of sales approach. The pro forma has a projected external financing need of -GHS 5,500. What are the firm's options in this case?
2. You want your portfolio beta to be 0.95. Currently, your portfolio consists of GHS 4,000 invested in stock A with a beta of 1.47 and GHS 3,000 in stock B with a beta of 0.54. You have another GHS 9,000 to invest and want to divide it between an asset with a beta of 1.74 and a risk-free asset. How much should you invest in the risk-free asset?
3. Theo's Bar & Grill needs GHS 147,000 a week to pay bills. The standard deviation of the weekly disbursements is GHS 9,600. The firm has established a lower cash balance limit of GHS 40,000. The applicable interest rate is 3.5 percent and the fixed cost of transferring funds is GHS 45. Based on the BAT model, what is the optimal average cash balance?
4. How can an investor lose money on a stock while making money on a bond investment if there is a reward for bearing risk? Aren't stocks riskier than bonds?