an investor is considereing three types of investment: a high-risk venture into oil leases with a potential return of 15%, a medium risk investment in bonds with a 9% return, and a relatively safe stock investment with a 5% return. He has $50,000 to invest. Because of the risk; h...
An investor is considering three types of investments: a high-risk venture into oil leases with a potential return of 15%, a medium-risk investment in stocks with 9% return, and a relatively safe bond investment with a 5% return. He had $50,000 to invest. Because of the risk,...
If 10-year T-bonds have a yield of 5.2%, 10-year corporate bonds yield 7.5%, the maturity risk premium on all 10-year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bo...
The investor plans to invest in only one of three alternatives: a high-risk stock, a low-risk stock, or a savings account that pays a sure $500. To invest in either stock, the investor must pay a brokerage fee of $200. If the market goes up, the value of the high-risk stock w...
The standard Deviation represents the risk of a stock, is the risk of the average stock value greater than or less than the risk of each individual stock. You have a portfolio of 40 stocks with the return on each stock having a mean of 4% and a standard deviation of 5%. I need t...
An investor calculates his return and risk in €. The investor has invested in a U.S. portfolio now worth $1.000. The investor thinks that there is a 40% chance that the portfolio will be worth $1.300 one year from now and a 60% chance that it will be worth $900. The € is now wort...
An Investment Fund manager is required to maximise the return on a portfolio of bonds given the following information: Bond types Projected rate of return Benchmark government 9.1 UK gilts 10.3 Global investment grade (US $) 6.7 Global investment...
Assuming a not so viscous fluid medium so that the terminal velocity is relatively large, obtain a formula for the terminal velocity (v) of a ball radius R falling through this medium.
Term-structure of interest rates and ArbitrageThe current term-structure of spot interest rates for safe zero-coupon bonds isas follows:Maturity, inyearsInterest rate(r)1 8%2 10%3 11%4 12%5 13%There is a safe bond B which has 4 years before maturity and pays a couponof 12% at reg...
he current term-structure of spot interest rates for safe zero-coupon bonds is as follows:Maturity, in yearsInterest rate(r)1 8%2 10%3 11%4 12%5 13%There is a safe bond B which has 4 years before maturity and pays a couponof 12% at regular annual intervals and a face value of $10...
The current term-structure of spot interest rates for safe zero-coupon bonds is as follows:Maturity, in yearsInterest rate(r)1 8%2 10%3 11%4 12%5 13%There is a safe bond B which has 4 years before maturity and pays a couponof 12% at regular annual intervals and a face value of $1...
Working with a two-factor APT model an investor has found two risk factors, X and Y. The investor is looking at two stocks, A and B. The expected return on stock A is 12% and that of stock B 10%. The beta (factor sensitivity) of stock A with respect to X is 1 and with respect to...