Finance Final

/MiddSuppose that in the coming year, you expect Exxon-Mobil stick to brook a volatility of 42% and a beta of 0.9, and Mercks stock to have a volatility of 24% and a beta of 1.1. The risk free interest rate is 4% and the markets expected number is 12%. The cost of capital for a project with the identical beta as Mercks stock is circumferent to: . | d. 12.8% | E[R] = Rf + beta × Risk Premium = .04 + 1.1 × (.12 - .04) = .128 | Which stock has the highest total risk? | c. Exxon-Mobil since it has a higher volatility | | ------------------------------------------------- If a stock pays divid lasts at the end of each quarter, with realised returns of R1, R2, R3, and R4 each quarter, then the annual realized return is calculated as Choose one answer. | c. Rannual = (1 + R1)(1 + R2)(1 + R3)(1 + R4) - 1 | | ------------------------------------------------- take the following realized annual returns: class End| S&P 500 agnize Return| IBM Realized Return| 1996| 23.6%| 46.3%| 1997| 24.7%| 26.7%| 1998| 30.5%| 86.9%| 1999| 9.0%| 23.1%| 2000| -2.0%| 0.2%| 2001| -17.3%| -3.2%| 2002| -24.3%| -27.0%| 2003| 32.2%| 27.9%| 2004| 4.4%| -5.1%| 2005| 7.4%| -11.3%| The standard deviation of the returns on IBM from 1996 to 2005 is closest to: | d.

33.2% | Rannual = = = 16.45% Year End| IBM Realized Return| (R - R)| (R - R)2| 1996| 46.3%| 29.85%| 0.0891023| 1997| 26.7%| 10.25%| 0.0105063| 1998| 86.9%| 70.45%| 0.4963203| 1999| 23.1%| 6.65%| 0.0044223| 2000| 0.2%| -16.25%| 0.0264063| 2001| -3.2%| -19.65%| 0.0386123| 2002| -27.0%| -43.45%| 0.1887903| 2003| 27.9%| 11.45%| 0.0131103| 2004| -5.1%| -21.55%| 0.0464403| 2005| -11.3%| -27.75%| 0.0770063| Variance = SUM of( R - R)2 / T - 1 = 0.9907165 / 9 = 0.1100796 Standard deviation = = = 0.3317825 | The magnetic declination of the returns on the S&P 500 from 1996 to 2005 is closest to: Choose one... If you want to get a full essay, holy order it on our website: Ordercustompaper.com

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