Compute each stock's average return, standard deviation, and coefficient of variation. (Round your answers to 2 decimal places.) Average return Standard deviation Coefficient of variation Estee Lauder Which stock appears better? Estee Lauder O Lowe's Companies Lowe's Companies %

Q: What is the present value of the annuity that is payable quarterly for 4 years at 10% compounded…

A: PV of an ordinary annuity can be determined with the formula below: PV = PMT1 - (1+r)-nrWhere PMT =…

Q: At the time of her grandson's birth, a grandmother deposits $9000 in an account that pays 8%…

A: We will use the below formula to calculate the future value   Future value = PV*(1+r)n Where PV -…

Q: Assume you deposit $2,000 every six months at 10 percent compounded semi-annually. How much will you…

A: To Find: Future Value

Q: What makes indirect benefits so difficult to include in a BCA? What techniques might be used?

A: Indirect benefits are those benefits the return of which cannot be directly observed. Moreover, such…

Q: (True/False) When multiple risk factors are involved, the effect of these factors on VaR will always…

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions…

Q: Stag Company will pay dividends of $9.6, $5.9, $9.7 and $10 for the next four years. Thereafter, the…

A: To Find: Current market price of the share

Q: The amount of annuity that is payable for 5 years at 12% compounded monthly is Php25,000. How much…

A: Given: Years =5 Interest rate = 12% Future value = $25,000

Q: Suppose you have purchased some GameStop shares on margin at $5 per share. You ask your broker to…

A: A long position has been taken on margin. The broker has put a stop loss and limit sell order. We…

Q: If a certain stock sells for 626.659 dollars on the NYSE, how much will it sell for, in dollars, on…

A: 1) If a Stock trades at more than one stock exchange, then the price at all the stock exchanges will…

Q: Problem #2 Temporary Employee Time Card Name: Eugene Mueller Dept: Sales Note: No Overtime Rate…

A: Gross pay is the total amount earned by the employee for the time he worked. It also includes…

Q: Suppose the real rate is 2.9 percent and the inflation rate is 4.5 percent. What rate would you…

A: Real rate = 2.9% Inflation rate = 4.5%

Q: Supposing the return from an investment has the following probability distribution   Return…

A: Expected return: The entire amount of money an investor anticipates making or losing on a specific…

Q: You are trying to plan your investments for the next year. You have decided that the market will…

A: Expected Return , Standard deviation (volatility) and covariance is calculated using the below…

Q: ZumBahlen Inc. is considering the following mutually exclusive projects: Year 0 1 2 234 3 Project A…

A: Solution:- Cross over rate is the discount rate at which the Net Present Value (NPV) of the two…

Q: If you have $30,000 in a savings account earning 10 percent, how large an annuity can you draw out…

A: Present value = $30000 Interest rate = 10% Period = 8 Years

Q: Which statement best describes the concept of risk? A) Under a situation of risk, future outcomes…

A: When you invest money than there is uncertainty related and not sure how much you would earn or how…

Q: Assume the spot rate between the uk and the US is .€ .6789= $1 while the one year Foward  rate is…

A: Covered interest arbitrage is an arbitrage strategy used by investors where they use the difference…

Q: Harry is trying to evaluate a two year project using NPV. There is uncertainty as to the level of…

A: The outlay is £230,000 Contribution is £10 Cost of capital is 10%

Q: As an innovative way to pay for various software packages, a new high-tech service company has…

A: Different streams of payments have been given. We have to find the one that's most beneficial from…

Q: Question 17 What is the amount of an annuity that is payable for 2 years at 6% compounded monthly if…

A: Solution:- When an equal amount is saved each period at end of period, it is called ordinary…

Q: Two indices contain exactly the same stocks; one is a market-capitalization-weighted index that…

A: 1) Market Capitalization weighed Index is the calculated by sum of individual Market Capitalization…

Q: An important application of compound interest involves amortized loans. Some common types of…

A: Amortization of loan means the repayment process in which the principal amount and the interest on…

Q: ABC will be issuing a non- interest-bearing bond that has a face value of P10,000,000, term of 5…

A: Face value = P10,000,000 Price = P6,375,000 Term = 5 Years Effective cost of the bonds = ?   It is a…

Q: You currently have $5,300. First United Bank will pay you an annual interest rate of 8.8, while…

A: As per the given information: Future value - $13,000 Present value - $5,300 Rate of interest - 8.8…

Q: (1) Established companies tend to grow their panel of banks over time to need its expanding banking…

A: We have two statements. We need to argue if they are individually true or false.

Q: You borrow $6,000 at a 10 percent annual rate to be repaid in 3 equal payments at the end of each of…

A: The annual installment is calculated with the help of following formula  Annual Installment = Amount…

Q: in both Can and U.S. dollars, it can choose which currency to exchange the euros for at the end of…

A: Forward premium A forward premium in the exchange rate is the rate by which the expected future…

Q: Which of the following least describes the fundamental weighting of indices?   There may be a…

A: The fundamental weighted index's  is calculated by estimating the economic scale of each company…

Q: Bucco Tours Ltd and Storebay Tours Ltd operate in the same geographical area and are close…

A: There are two firms identical in all respect except for capital structure. Taxes are absent. We have…

Q: Muffin’s Masonry, Inc.’s, balance sheet lists net fixed assets as $26 million. The fixed assets…

A: The book value of assets is the value of assets in the Balance Sheet of the firm. The market value…

Q: What is financial repression and why does it exist?

A: Financial repression is the phrase used to describe policies used by governments to funnel money…

Q: You want to buy a home.  You can borrow 95% of the purchase price.  Assuming you can make a down…

A: To calculate the price of home we will use the below  formula   Home price = Down payment/(1-Loan to…

Q: Brown Mack Ltd currently has two large manufacturing divisions that share a single plant. Brown Mack…

A: Overheads are the indirect expenses that are incurred in the business. They are allocated on…

Q: Which of the following limits the market from becoming a fully efficient market? New…

A: Market efficiency is the ability of markets to process the information quickly and generate the…

Q: You are financing a car worth $66050.54 with tax included. Interest rates are 12.7% compounded…

A: Given: Particulars Amount Car worth 66050.54 Interest rate 12.70% Years 3 Down payment…

Q: An investment offers a total return of 14 percent over the coming year. Janice Yellen thinks the…

A: Solution:- Total return means the rate of return earned without deducting the effect of inflation…

Q: Suppose you decide to short sell some GameStop shares. Their cur- rent price is $5, and you have…

A: i) a) Given, Margin requirement is 50% and the cash available is $5000, Cash available with margin =…

Q: Use the Excel NPV() function to calculate the maximum loan you would be willing to give today for a…

A: Annual payment = $18,000 Interest rate = 10%

Q: Complete the following using present value. (Use the Table 12.3 provided.) Note: Do not round…

A: Time Value is an important technique which states that money has earning capacity, hence each dollar…

Q: uestion #3

A: Loans are paid by the monthly payments that carry the payment for loan amount and interest amount…

Q: FInd the oddinary interest on 500,000 at 5.5% invested fro, April 1 to December 24, 2017 using…

A: Simple interest is simple there is no compounding of interest that means no interest on interest is…

Q: If Php10,568 is the proceeds obtained after Php13,500 is discounted for 10 months, what is the…

A: We have the discounted proceed from an original proceed. We need to calculate the discount rate.

Q: App1 is a company that has a patent right for a new mobile technology that is expected to enable it…

A: Share Price is the sum of all cashflows discounted at a certian discount rate Share Price =…

Q: The entity received P4,500,000 cash from the issuance of its 9%, 10-year P5,000,000 par value…

A: Par Value = P5,000,000 Time Period = 10 Years Interest (Coupon) Rate = 9% Present Value = P4,500,000

Q: In April 2019, Van Dyck Exponents offered 130 shares for sale in an IPO. Half of the shares were…

A: a-1) Information provided: Half of 130 shares is for company @ $56. Hence, Proceeds of the issue to…

Q: ! Required information Lego Group in Bellund, Denmark, manufactures Lego toy construction blocks.…

A: Present value of annuity is the current value of the future payments that are calculated using the…

Q: Melissa Cult is thinking about buying some shares of EZLawn Equipment, at $44 15 per share She…

A: Note: Numbers are illegible, please check the numbers.   Data given: Purchase price=$44.15 per share…

Q: Why Softbank was willing to bail WeWork despite losses and mismanagement of funds (multiple answers…

A: SoftBank lost over 90% of its $10.3 billion investment in WeWork and was compelled to bail it out…

Q: On the basis of the financial information given in this case, complete the WACC table that is…

A: The Weighted Average Cost of Capital: The weighted average cost of capital is a single, composite…

Q: Remember from class that YTM - Riskfree = sum of rilk premiums. Assume the risk-free rate is 1.924…

A: Risk free rate = 1.924 Credit risk premium = 1.260 Maturity perium = 1.218

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.