Paper instructions:

Jand, Inc., currently pays a dividend of $1.22, which is expected to grow indefinitely at 5%. If the current value of Jand’s shares based on the constant-growth dividend discount model is $32.03, what is the required rate of return? (Round to 2 basis points – answer should look like “X.XX%”)

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Question 2 (1 point) Question 2 Unsaved

Tri-coat Paints has a current market value of $41 per share with earnings of $3.64. What is the present value of growth opportunities (PVGO) if the required return is 9%?

(Answer should be in the form of $X.XX)

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Question 3 (1 point) Question 3 Unsaved

The market capitalization rate for Admiral Motor Company is 8%. Its expected ROE is 10% and its expected EPS is $5. If the firm’s plowback ratio is 60%, what will be its P/E ratio?

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Question 4 (1 point) Question 4 Unsaved

Eagle Products’ EBIT is $300, its tax rate is 35%, depreciation is $20, capital expeditures are $60, and the planned increase in net working capital is $30. What is the free cash flow to the firm?

(Answer should be in the form $XXX)

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Question 5 (1 point) Question 5 Unsaved

Which of the following statements about standard deviation is/are true? A standard deviation

I. Is the square root of the variance.

II. Is denominated in the same units as the original data.

III. Can be a positive or negative number.

Question 5 options:

a)

I only

b)

I and II only

c)

II and III only

d)

I, II, and III

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Question 6 (1 point) Question 6 Unsaved

Assume you manage a risky portfolio with an expected rate of return of 17%, and a standard deviation of 27%. The T-Bill rate is 7%.

If your client chooses to invest 70% of a portfolio in your fund and 30% in a T-bill money market fund, what is the expected return on the client’s portfolio?

(Answer should be in the form XX%)

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Question 7 (1 point) Question 7 Unsaved

Assume you manage a risky portfolio with an expected rate of return of 17%, and a standard deviation of 27%. The T-Bill rate is 7%.

If your client chooses to invest 70% of a portfolio in your bond and 30% in a T-bill money market fund, what is the standard deviation of the client’s portfolio?

(Answer should be in the form XX.X%)

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Question 8 (1 point) Question 8 Unsaved

Assume you manage a risky portfolio with an expected rate of return of 17%, and a standard deviation of 27%. The T-Bill rate is 7%.

What is the Sharpe ratio of your portfolio?

(Answer should be in the form X.XXXX)

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Question 9 (1 point) Question 9 Unsaved

You manage an equity fund with an expected return of 16% and a standard deviation of 14%. The T-bill rate is 6%. Your client chooses to invest $60,000 of her portfolio in your equity fund and $40,000 in a T-bill money market fund. What is the Sharpe ratio of the client’s portfolio?

(Answer should be in the form X.XXXX)

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