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; he will limit his investment in oil leases and bonds to...
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, he will limit his investment in oil leases and stocks to 30% and...
Investor 1 is more risk averse than investor 2. This means that for the same amount of extra risk, investor 1 will demand ________ ￼ risk-premium than investor 2. Select one: a. higher b. lower
bonds with relatively low risk of default are called 1) Bonds with relatively low risk of default are called securities and have a rating of Baa (or BBB) a above; bonds with ratings below Baa (or BBB) have a higher default risk and are called A) investment grade; lower grade C) high quality; lower grade B) investment grade; junk bonds...
Highland Investment, a venture investor, is considering investing in a software venture opportunity. However, the rate of return to be realized next year is likely to vary with the economic climate that actually occurs. Following are three possible economic outcomes, the probability that each one will occur, and the rate of return projected for each outcome: Economic Probability of ...
A private investment club has $175,000 e been classified into three categories: high-risk, medium-risk, and low-risk. Management estimates t stocks, 10%/year, and low-risk stocks, 6%/year. The members have of the other two categories. Determine how much the club should invest in each type of stock if the investment goal is to have a return of $17,500/year on the total for...
An investor’s utility function for expected return and risk is U = E(r) − 4σ2. Which of the following would this investor prefer to invest in: A risk-free security offering a return of 8 percent per year A risky portfolio with expected return of 14 percent per year and standard deviation of 25 percent per year Select one: a. Risk-free...
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 will increase by $1,700, and the value of the...
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 bond?a. 1.00%b. 1.10%c. 1.20%d. 1.30%e. 1.40%
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.
Required return on Stock = Risk-free return + (Market risk premium)(Stock's beta) to compensate the investor for risk. If a stock's expected return plots below the SM If a stock's expected return plots on or above the SML, then the stock's return is -Select- the stock's return is -Select- to compensate the investor for risk. The SML line can change...
2A uniform electromagnetic plane wave is normally incident norm the air region (medium #1 with intrinsic medium (medium #2 with intrinsic k,- and wavenumber k ) upon the planar interface separating air from a lossy dielectric impedance 'h-%(I + J) and wavenumber (1-)).The incident plane wave in air has a phasor electric field given by 2. Find (leave all answers...
9. Wyoming Natural Gas, Inc. is weighing a drilling venture into the Teton Mountains. The venture re- quires an initial outlay of $73M, but is anticipated to generate a perpetual series of $10M cash flows starting one year from today. 12.5% is the appropriate required rate of return for valuing this venture. a. Calculate the project's NPV. b. Now, suppose...
3.A uniform electromagnetic plane wave is normally incident from the air region ( medium #1 with+ η = η。= 120π ) upon the planar interface separating air from a lossy dielectric medium (medium #2 with intrinsic impedance 20π + jlOr ). The incident plane wave in air has a phasor electric field given by E(x)-le, x<0 Find: (a) the frequency...
Consider Iran and Iraq and their production of oil and olive oil. Relatively recent OPEC estimates indicate that in July 2012, Iran produced about 4.1 million barrels of oil per day and Iraq produced about 3.2 million barrels of oil per day, making them the second- and third-largest oil producers in OPEC, behind Saudi Arabia (and the 4th and 7th...
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 regular annual intervals and a face value of £100 at maturity.(a) What will be the current price of...
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 $100 at maturity.(a) What will be the current price of bond B?
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 $100 at maturity.(a) What will be the current price of bond B?