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(Answered) Financial Management


Read the instructions carefully and complete all work in detail. I have uploaded the assignments and supporting materials. You can disregard the pdf.. There is no pdf.. Document Preview: Week 3 Individual Assignment- Refer to Chapters 6 and 7 for materials to help you complete this assignment. Show step by step instructions on how you get to the answers in detail. The answers are provided to you for each question. You have to write in words and numbers step by step instructions on how exactly you get to the final answer which is highlighted for you. 3.1. Paris Company has made a portfolio of these three securities: Security Cost E(R) s(R) Treasury bond $65,000 5% 0 Marseille Corporation $60,000 13% 25% Lyon Company $35,000 17% 35% The correlation coefficient between Marseille and Lyon is 0.6. If the returns are normally distributed, find the probability that the return of the portfolio is more than 8%.56.83%? 3.2. Suppose you have $50,000 that you want to invest in two companies in the following table. Their correlation coefficient is 40%. Your portfolio should have a return of 13%. Security Price/share E(R) s(R) Toulouse Oil Company $10 12% 25% Nice Aluminum $20 16% 32% (A) Approximately how many shares of stock of each company should you buy?Toulouse 3750 shares, Nice 625 shares? (B) What is the s of the portfolio?.2314? 3.3. Nantes Corporation?s common stock sells for $51.25 a share and its current annual dividend is $5. The? of this stock is 1.3. It has shown 3% annual growth in dividends for many years. The current riskless rate is 4%. Today, the analysts downgraded the stock from?buy? to?hold?. In response to the news, the stock dropped in price by $1.25. Assume that the stock will maintain the growth in dividends. (A) Find the new? of the stock.1.336? (B) Expected return of the market.10.96%? 3.4. The Strasbourg Corp common stock has a? of 1.55 and it will pay a dividend of $1.65 next year. The following table shows the various possible economic situations. State of the economy Probability Expected return of the market Good 50% 15% Fair 30% 10% Poor 20% -10% The current... Attachments: Week-3-Discus....docx Week-3-Indivi....docx Week-2-Discus....docx
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Financial Management

 


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