please help these math questions LARGE REWARD

Question # 00016369 Posted By: abbyhocks Updated on: 05/28/2014 10:37 PM Due on: 06/03/2014
Subject Mathematics Topic General Mathematics Tutorials:
Question
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  1. Suppose all possible investment opportunities in the world are limited to the four stocks list in the table below:
    StockPrice per ShareNumber of Shares Outstanding (Millions)
    Taggart Transcontinental$15.6025
    Rearden Metal$13.0045
    Wyatt Oil$29.2510
    Nieldon Motors$26.2526

    Suppose that you are holding a market portfolio and you have invested $9,000 in Rearden Metal. The amount that you have invested in Nielson Motors is closest to:

Question 2

  1. Consider the following linear regression model:

    The ei in the regression


Question 3

  1. Consider the following information regarding corporate bonds:
    RatingAAAAAABBBBBBCCC
    Average Default Rate0.0%0.0%0.2%0.4%2.1%5.2%9.9%
    Recession Default Rate0.0%1.0%3.0%3.0%8.0%16.0%43.0%
    Average Beta0.050.050.051.00.170.260.31

    Wyatt Oil has a bond issue outstanding with seven years to maturity, a yield to maturity of 7.0%, and a BBB rating. The bondholders expected loss rate in the event of default is 70%. Assuming a normal economy the expected return on Wyatt Oil's debt is closest to:


Question 4

  1. Consider the following information regarding corporate bonds:

    RatingAAAAAABBBBBBCCC
    Average Default Rate0.0%0.0%0,2%0,4%2.1%5.2%9.9%
    Recession Default Rate0.0%1.0%3.0%3.0%8.0%16.0%43.0%
    Average Beta0.050.050.050.100.170.260.31
    CompanyMarket Capitalisation ($mm)Total Enterprise Value ($mm)Equity BetaDebt Rating
    Taggart Transcontinental$4,5008,0001.1BBB
    Rearden Metal$3,8007,2001.3AAA
    Wyatt Oil$2,4003,8000.9A
    Nielson Motors$1,5004,4001.75BB

    Your estimate of the asset beta for Taggart Transcontinental is closest to:


Question 5

  1. RON Ltd has the following capital structure components:

    • Five million shares issued with a current market price of 11. Equity holders require a 10% return.
    • $10 million face value of Corporate bonds outstanding. These bonds pay an annual coupon of 6% and currently trade at a yield to maturity of 6%.

    If the firm faces a corporate tax rate of 30%, compute RON Ltd's Weighted Average Cost of Capital (WACC). Enter your answer in decimal form to FOUR decimal places. For example 10.34%, would be entered as 0.1034


Question 6

  1. If a project has a higher proportion of fixed to variable costs, holding the risk of its revenues constant


Question 7

  1. Which of the following statements is FALSE?


Question 8

  1. John Galt is a mutual fund manager at Atlas Asset Management. He can generate an alpha of 2% a year up to $500 million of invested capital. After that amount his skills are spread too thin, so he cannot add value and his alpha is zero for all investments over $500 million. Atlas Asset Management charges a fee of 0.80% on the total amount of money under management. Assume that there are always investors looking for positive alpha investments and no investor would invest in a fund with a negative alpha. Assume that the fund is in equilibrium, meaning that no investor either takes out money or wishes to invest new money into the fund.

    The amount of money that Galt's fund will have under management is closest to:


Question 9

  1. Which of the following statements is FALSE?


Question 10

  1. Assume that the economy has three types of people. 15% are fad followers, 75% are passive investors, and 10% are informed traders. The portfolio consisting of all informed traders has a beta of 1.3 and an alpha of 1.91%. The market has an expected return of 12% and the risk-free rate is 4 %.What is the alpha for the fad followers? Enter your answer as a percentage to two decimal places (i.e. 0.12% rather than 0.0012; the percent sign is not necessary).
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Tutorials for this Question
  1. Tutorial # 00015877 Posted By: vikas Posted on: 05/29/2014 03:25 PM
    Puchased By: 2
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