Select Page

## Finance Chapter 6 Assignment Problems

Chapter 6 AssignmentCalculate r hat, sigma square, sigma, and CV from the following information.Demand Probability of Demand Occurring Rate of Return if demand occursPoor .1 -80% Below Average .2 -10%Average .4 10%Above average .2 35%Excellent .1 50%Use the following data from ABC and XYZ to calculate annual returns for each company and the market index. Then figure out the average returns for each. You do this by ((New stock price â Old stock price + dividend) / Old stock price)). ABC XYZYear Stock Price Dividend Stock Price Dividend Market Index (includes dividend)2012 18.00 1.10 38.00 5.50 11,521.592011 20.00 1.00 45.00 5.00 9,000.002010 15.00 .90 60.00 4.50 8,562.482009 9.00 .80 55.00 4.00 7,705.252008 12.00 .70 70.00 3.50 7,500.592007 5.00 .60 40.00 3.00 6,380.48Now calculate the rates of return for the two companies and the index: ABC XYZ Market Index2012 2011 2010 2009 2008 Now calculate the standard deviation of returns for ABC, XYZ, and the Market Index. Use information from part f.ABC XYZ Market IndexStd. Dev. Calculate the coefficients of variation of ABC, XYZ, and the Market Index. Use information from part f and g.ABC XYZ Market IndexCV Use the information that you calculated in part F to run a regression to estimate ABCâs and XYZâs beta. Use the tool kit as a guide for running regressions. Stock returns are the y-axis and the market return is the x-axis.ABC beta isXYZ beta isThe risk free rate on LT treasury bonds is 1.5%. Assume the market risk premium is 4%. Use the CAPM to calculate the two companiesâ required returns. rs = risk free rate + Beta *Market Risk Premium. Betas are listed in part I.Required return for ABC =Required return for XYZ =What is the portfolio beta that consists of 50% of both stocks (ABC and XYZ)? Use part I for information.Portfolio Beta =

```We pride ourselves in writing quality essays

#### Plagiarism Free

We use anti-plagiarism software to ensure you get high-quality, unique papers. Besides, our writers have a zero plagiarism mentality

#### On Time Delivery

Your essay will be delivered strictly within the deadline.  If you have an urgent order, we can do it!

#### Money Back Guarantee

We offer warranty service, including free revisions, and a right to request a refund incase your expectations are not met!

#### THE BEST PAPER WRITER HELPER

• Say “NO” to plagiarism – FREE plagiarism report as an addition to your paper
• The lowest prices that fit excellent quality
• Authorship – you are the one who possesses the paper. We DO NOT re-sale or re-use any of them.

### Our Freebies

• Free Cover Page
• Free Revisions
• Free Reference Page