Problem set

Financial analysis代写 required rate of return for IBM stock is 12%; 1 year Treasury bills are yielding 5%; inflation rate is 2%.  

Financial analysis代写
Financial analysis代写

Questions 1 and 2 are based on the following information: required rate of return for IBM stock is 12%; 1 year Treasury bills are yielding 5%; inflation rate is 2%.Financial analysis代写

 

  1. The risk premium on IBM is ___.

 

  1. The real rate of interest is ___.

 

  1. Explain the relationship between interest rates and the value of existing bonds.

 

What does duration tell you about this relationship?Financial analysis代写

 

  1. Calculate the duration and modified duration of the following:

 

i. GE’s AAA-rated zero coupon bond with 10 years to maturity.  Other AAA rated 10 year bonds are yielding 5%.

 

ii. WMT’s 3 year 6% coupon bond.  The bond’s Par value is 1000 and its YTM is 5%.

 

  1. What is the modified duration of an equally weighted portfolio of GE and WMT bonds (from 4)?

 

What does this number represent to fixed-income portfolio managers?Financial analysis代写

 

  1. The Slipperyrock Bank has money-market deposit rate of 3 percent compounded quarterly.

 

It will take ________ years to double your money.

 

  1. I bought a 30 year coupon bond this morning at $1000 (par value is $1000).

 

At what price can I sell it this afternoon, if yields on these bonds have fallen from 7% this morning to 6.5% this afternoon?Financial analysis代写

 

  1. Find the value of the following stocks:

 

i. The Preferred stock of SBAS Corp. pays an annual dividend of $2.5. The required rate of return on the stock is 18%.

 

ii. The Common stock of SBAS Corp. pays an annual dividend of $3.0. Dividends are expected to grow at 4%. The beta of SBAS is 1.3, the average return on the S&P500 over the past 70                           years is 9%, and the 30 year T-bond yield is 3.5%.

 

  1. Find the value of a 15 year bond issued by Webbedfoot & Co. given the following information: Coupon: 7.5%

 

  •                Payment of coupon: Annual
  •                Risk free rate of return: 3%
  •                Risk premium on Webbedfoot bonds: 8%.

 

  1. Find the yield to maturity of a 10% annual coupon bond maturing in 25 years with a current market price of $1,300.

 

 

  1. You have just financed a Jaguar priced at $42,000.

 

The loan requires annual repayments over 3 years.  The annual percentage rate on the purchase is 10%.  Write out the amortization schedule for the purchase.  The schedule should contain                annual total payments, annual interest payments, annual principal payments and end of year balances.Financial analysis代写

Questions 12-14 are based on the following Income Statement data for RuNutz Corp: Revenues = $50 million; Cost excluding depreciation = $7 million; Depreciation = $3 million; Interest                Expense = $0.5 million; Tax rate=30%; Preferred Dividends = $1 million; Common Dividends = $2 million.  The company has 7 million common stocks outstanding, and 1 million stock                    options that are likely to be exercised; the current stock price is $10 and the Strike price is 2.Financial analysis代写

  1. The undiluted EPS for the year is____, and the fully diluted EPS is______.

 

  1. If the company increased its receivables by $3 million, and its payables by $5 million, the change to cash flows from operations for the year is________.

 

  1. The retained earnings of the company is ________.

 

  1. Pekoe Corporation has a Market/Book ratio of 3 and a current stock price of $20.

 

Its book value of assets is $200 million, and its liabilities are stated at $100 million.  Pekoe has____ stocks outstanding.Financial analysis代写

 

  1. The Dow was at 80 in 1930 and is at 10,000 80 years later.

 

The annually-compounded  geometric rate of return is_________, and the continuously compounded rate of return is _____________.

 

  1. * Nike Corporation is paying 7% APR on their senior notes with interest due on a quarterly basis.

 

The company faces an effective rate of interest of _________.

 

  1. *I invested $1000 in a stock portfolio 5 years ago.

 

I contributed another $1000 3 years ago.  The current value of the portfolio is $6000.  What is my dollar weighted rate of return  (internal rate of return)?Financial analysis代写

 

  1. Answer both parts of this question:

 

i. An asset will start paying annual dividends 5 years from today.  The first ten dividends will be $1000 each.  Starting on the 15thyear, the asset will pay $2000 annually per year forever.                       The beta of this asset is 1 and the expected return on the Market portfolio is 10%.  Establish the fair value of this asset.Financial analysis代写

ii. You expect to put away (invest) 10% of your income every year.  Your income was $100,000 last year, and it is expected to grow at 5% annually.   You will put your money in a fund that                      mimics the S&P 500 index whose historic return is 10%.  How much do you expect to have at the end of 25 years (when you retire)?Financial analysis代写

 

20. Systematically present the elements of the 3 key financial statements.

 

For each, indicate the problems that a financial analyst would run into when dealing with accounting treatment of R&D.

  1. Using a Bloomberg Terminal, download (at least some) relevant financial information for fundamental analysis and/or technical analysis for the firms you are analyzing.

 

Please show evidence that that information gathered is from a Bloomberg Terminal. (You could take a snapshot of the screen or submit a Bloomberg/Excel file)

 

  1. Using a Bloomberg Terminal or Yahoo Finance, download 3 years of daily price history for the S&P 500 and for the companies you are analyzing for your final report.  Run appropriate regressions (having checked for data synchronicity) to obtain:

 

a. Regression R2for the two regressions.

b. α and β for the two companies.

Use the Sharpe Ratio and Treynor Ratio to assess whether your 2 stocks outperformed the S&P 500 over the interval in the “risk-return sense.”Financial analysis代写

 

Financial analysis代写
Financial analysis代写

 

  1. Using the “amortization” file provided on Moodle as guide, please produce in Excel an amortization schedule for the following loan:

 

15 year loan

Loan amount: $540,000

6.5%APR

Equal Monthly payments

Show how the payment schedule will change if you decide to make a single lumpsum payment of $20,000 over and above your scheduled monthly payment on the 24th month.   Financial analysis代写

 

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