Question: Please, calculate all task and show all formulas which were used. Thank you in advance) 1. Suppose, you have to pay debt of $400,000 in
Please, calculate all task and show all formulas which were used. Thank you in advance)
1.Suppose, you have to pay debt of $400,000 in 4 years. You can invest money in 2 bonds:
The First bond. Bond without coupons with maturity of 3 years. The current price of it is $50,4 par value is 70.
The Second bond. It is a coupon bond with maturity of 5 years and coupon rate of 8, par value is 100, current price is 90.
Describe the plan of portfolio construction.
2.Two investment advisors are comparing performance. One averaged a 16 percent return and the other a 12.4 percent return. However the beta of the first advisor was 1.5 while that of the second was 1.1. If the t-bill rate were 7 percent, and the market return during the period were 12 percent, which advisor would be the superior stock selector?
3.What is the beta of a portfolio with E(rp)=15 percent, if rf(risk-free)=7 percent and E(rm(market))=12 percent.
4.Calculate the following criteria:
Net Present Value
Payback Period
Internal Rate of Return
Profitability index
If the cash flow of than investment project is as follows, than:
1year - (-400)4 year - (1200)
2 year -(-200)5 year - (1400)
3 year - (100)6 year - (2500)
Discount rate = 10%
5.Calculate WACC
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