Business, 29.11.2019 03:31 marainafolta

Consider a risky portfolio. the end-of-year cash flow derived from the portfolio will be either $70,000 or $200,000 with equal probabilities of .5. the alternative risk-free investment in t-bills pays 6% per year.
a. if you require a risk premium of 8%, how much will you be willing to pay for the portfolio? (round your answer to the nearest whole dollar amount. omit the "$" sign in your response.)
$
b. suppose that the portfolio can be purchased for the amount you found in (a). what will be the expected rate of return on the portfolio? (round your answer to the nearest whole number. omit the "%" sign in your response.)
rate of %
c. now suppose that you require a risk premium of 12%. what is the price that you will be willing to pay? (round your answer to the nearest whole dollar amount. omit the "$" sign in your response.)
$

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 15:00

Match the terms with the appropriate definition. 1. work done for pay job 2. series of related jobs based on knowledge, training, tasks performed, interests, and experience career 3. buying or selling products and services using the internet mediation 4. wage amount after deductions are withheld net wage 5. a way a person chooses to live his or her life e-commerce 6. the people who are both able and willing to work technology 7. unequal treatment of others based on a bias concerning a person’s characteristics such as race, religion, gender, or age discrimination 8. the act of sharing information lifestyle 9. the use of a third party to make suggestions workforce 10. knowledge and tools used to perform tasks communication

Answers: 2

Answer

Business, 22.06.2019 18:00

Large public water and sewer companies often become monopolies because they benefit from although the company faces high start-up costs, the firm experiences average production costs as it expands and adds more customers. smaller competitors would experience average costs and would be less

Answers: 1

Answer

Business, 22.06.2019 20:20

Precision aviation had a profit margin of 6.25%, a total assets turnover of 1.5, and an equity multiplier of 1.8. what was the firm's roe? a. 15.23%b. 16.03%c. 16.88%d. 17.72%e. 18.60%

Answers: 2

Answer

Business, 22.06.2019 20:30

Casey communications recently issued new common stock and used the proceeds to pay off some of its short-term notes payable. this action had no effect on the company's total assets or operating income. which of the following effects would occur as a result of this action? a. the company's current ratio increased.b. the company's times interest earned ratio decreased.c. the company's basic earning power ratio increased.d. the company's equity multiplier increased.e. the company's debt ratio increased.

Answers: 3

Answer

You know the right answer?

Consider a risky portfolio. the end-of-year cash flow derived from the portfolio will be either $70,...

Questions