Calculation Questions by Mr. Dhananjaya Pathiraja - University of Kelaniya https://padlet.com/dhananjayap/mq63ju44rjl1wuhw en-us 2023-08-20 05:31:37 UTC 2023-09-12 07:00:28 UTC hello@padlet.com Question 01 dhananjayap https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666577509 Company A's stock has a beta of 1.2, the risk-free rate is 4%, and the market risk premium is 6%. What is the required return on Company A's stock according to the Capital Asset Pricing Model (CAPM)? ]]> 2023-08-20 05:34:56 UTC https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666577509 Question 02 dhananjayap https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666582950 The standard deviation of the market portfolio is 4%. The risky asset S shows a correlation coefficient with the market of 0.75 and a standard deviation of 8%. Compute the beta of asset S. ]]> 2023-08-20 06:07:49 UTC https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666582950 Question 03 dhananjayap https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666586419 A financial analyst is analyzing two investment alternatives Y and Z. Their rates of returns under different probabilities are as follows:

 | Probability  | Rate of Return  |  
                                   | Y                        | Z
 | 0.20                        | 22%                    | 5%
 | 0.60                        | 14%                     | 15%
 | 0.20                        | -4%                     | 25%
 
(i)                  For Y and Z, determine expected rate of return, variance and standard deviation. 
(ii)                 Is Y comparatively less risky investment? Explain 
(iii)               If the financial analysist wishes to invest equal amounts Y and Z, would it reduce risk? Explain. 

]]> 2023-08-20 06:28:28 UTC https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666586419 Question 04 dhananjayap https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666594030 A 10% coupon bond has ten years to
maturity and $1,000 face value. If the required rate of
return for this bond is 10%, how much does this bond sell
for?]]> 2023-08-20 07:07:15 UTC https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666594030 Question 05 dhananjayap https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666596093 A bond with face value of 1000 has an annual coupon rate of 15%, but coupons are paid semiannually. If the required rate of return on the bond is 10%, and the bond has 15 years to maturity, what is the bond price today?

]]> 2023-08-20 07:17:07 UTC https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666596093 Group No 03 https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666645036 RRR = Rf+B*Rp
=0.04+(1.2*0.06) = 0.112 = 11.2%]]> 2023-08-20 11:12:13 UTC https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666645036 Q-01 G-01 https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666645130 RRR = Rf+B(Rp)
       =0.04+1.2(0.06)
=0.112]]> 2023-08-20 11:12:39 UTC https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666645130 group 02 https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666646345 RRR = Rf+ Beta (Rp)
           0.04+0.12*0.06
        0.112]]> 2023-08-20 11:18:42 UTC https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666646345 Group No 03 - Question 03 https://padlet.com/dhananjayap/mq63ju44rjl1wuhw/wish/2666648402 Expected Return Sum R Y= (0.20*0.22)+(0.60*0.14)+(0.20*-0.04) = 0.12 = 12%

Expected Return Sum R Z= (0.20*0.05)+(0.60*0.15)+(0.20*0.25) = 0.15 = 15%

SD =




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