Question 01: A public limited Company had sales of Rs.2 million this year. The marketing manager expects sales to grow at a 10 percent compound annual rate over the next 10 years. On this basis, which of the following is the closest amount of sales in 10 years?
Question 02Suppose you invest Rs.400, 000 in treasury bills and Rs.600, 000 in the market portfolio. What is the return on your portfolio if bills yield 6% and the expected return on the market is 14%? What does the return on this portfolio imply for the expected return on individual stocks with betas of 0.6?
Stocks A and B has the following historical returns:
Year Stock A,s Returns (rA) Stock B,s Returns (rB)
2003 -18.00% -14.50%
2004 33 21.8
2005 15 30.5
2006 -0.5 -7.6
2007 27 26.3
Question 03: Assume that a person held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year from 2003 to 2007? What would have been the average return on the portfolio during this period?
Question 04: Does the value of firm increase when it increases its proportion of debt financing?
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