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A random walk process consists of the toss of a fair coin at the end of each day. If the outcome is heads stock price increases by 1.25% and if the outcome is tails the stock price decreases by 0.75%. What is the drift of such a process?
Basic Finance, Finance
Prokter and Gamble (PG) has historically maintained a debt-to-equity ratio (D/E) of approximately 0.3. Its cost of equity is 7.5% and it can borrow at 4.3%. PG's tax rate is 40%. PG believes it can increase debt without ...
A client plans to send a child to college for 4 years starting 18 years from now. Having set aside money for the tuition, she decides to plan for room and board also. She estimates these costs at $20,000 per year, payabl ...
Call option Carol Krebs is considering buying 100 shares of Sooner Products, Inc., at $62 per share. Because she has read that the firm will probably soon receive certain large orders from abroad, she expects the price ...
Financial Derivatives and Risk Management Assignment - 1. Calculate the PV of $10,000 to be received in ten years under various compounding frequencies: (1) Annual compounding at 10% (2) Monthly compounding at 10% (3) Co ...
King's Department Store is contemplating the purchase of a new machine at a cost of $36,686. The machine will provide $4,900 per year in cash flow for fourteen years. King's has a cost of capital of 12 percent. calculate ...
Facebook's sales were $7,878million in 2013. In 2017,sales were $41,050 million. What was Facebook's annual growth rate in sales during that time?
You have observed the following returns over time: Year BMG Market 1990 18% 13% 1991 4% 8% 1992 -12% 3% 1993 16% 10% 1994 18% 11% What is the beta for BMG?
A firm has sales of $613,000 with costs of $521,000. Interest expense is $26,000 and taxes is $16,500. What is the net income?
What is the maximum dollar amount that you would be willing to pay for an investment that pays $10,000 every second year forever if the 1st payment occurs four years from today (the 2nd payment will occur in six years et ...
You manage an equity fund with an expected risk premium of 13% and a standard deviation of 44%. The rate on Treasury bills is 6.6%. Your client chooses to invest $90,000 of her portfolio in your equity fund and $60,000 i ...
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