FIN 534 Week 3 Homework Chapter 5

FIN 534 Week 3 Homework Chapter 5

FIN 534 – Homework Chapter 5

1. Three $1,000 face value bonds that mature in 10 years have the same level of risk, hence their YTMs are equal. Bond A has an 8% annual coupon, Bond B has a 10% annual coupon, and Bond C has a 12% annual coupon. Bond B sells at par. Assuming interest rates remain constant for the next 10 years, which of the following statements is CORRECT?

a. Bond A’s current yield will increase each year.

b. Since the bonds have the same YTM, they should all have the same price, and since interest rates are not expected to change, their prices should all remain at their current levels until maturity.

c. Bond C sells at a premium (its price is greater than par), and its price is expected to increase over the next year.

d. Bond A sells at a discount (its price is less than par), and its price is expected to increase over the next year.

e. Over the next year, Bond A’s price is expected to decrease, Bond B’s price is expected to stay the same, and Bond C’s price is expected to increase.

2. Which of the following statements is CORRECT?

a. Two bonds have the same maturity and the same coupon rate. However, one is callable and the other is not. The difference in prices between the bonds will be greater if the current market interest rate is below the coupon rate than if it is above the coupon rate.

b. A callable 10-year, 10% bond should sell at a higher price than an otherwise similar noncallable bond.

c. Corporate treasurers dislike issuing callable bonds because these bonds may require the company to raise additional funds earlier than would be true if noncallable bonds with the same maturity were used.

d. Two bonds have the same maturity and the same coupon rate. However, one is callable and the other is not. The difference in prices between the bonds will be greater if the current market interest rate is above the coupon rate than if it is below the coupon rate.

e. The actual life of a callable bond will always be equal to or less than the actual life of a noncallable bond with the same maturity. Therefore, if the yield curve is upward sloping, the required rate of return will be lower on the callable bond.

3. Which of the following statements is CORRECT?

a. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yield and a higher capital gains yield than the par bond.

b. A bond’s current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.

c. If a bond sells at par, then its current yield will be less than its yield to maturity.

d. If a bond sells for less than par, then its yield to maturity is less than its coupon rate.

e. A discount bond’s price declines each year until it matures, when its value equals its par value.

4. Suppose a new company decides to raise a total of $200 million, with $100 million as common equity and $100 million as long-term debt. The debt can be mortgage bonds or debentures, but by an iron-clad provision in its charter, the company can never raise any additional debt beyond the original $100 million. Given these conditions, which of the following statements is CORRECT?

a. The higher the percentage of debt represented by mortgage bonds, the riskier both types of bonds will be and, consequently, the higher the firm’s total dollar interest charges will be.

b. If the debt were raised by issuing $50 million of debentures and $50 million of first mortgage bonds, we could be certain that the firm’s total interest expense would be lower than if the debt were raised by issuing $100 million of debentures.

c. In this situation, we cannot tell for sure how, or whether, the firm’s total interest expense on the $100 million of debt would be affected by the mix of debentures versus first mortgage bonds. The interest rate on each of the two types of bonds would increase as the percentage of mortgage bonds used was increased, but the result might well be such that the firm’s total interest charges would not be affected materially by the mix between the two.

d. The higher the percentage of debentures, the greater the risk borne by each debenture, and thus the higher the required rate of return on the debentures.

e. If the debt were raised by issuing $50 million of debentures and $50 million of first mortgage bonds, we could be certain that the firm’s total interest expense would be lower than if the debt were raised by issuing $100 million of first mortgage bonds.

5. Cosmic Communications Inc. is planning two new issues of 25-year bonds. Bond Par will be sold at its $1,000 par value, and it will have a 10% semiannual coupon. Bond OID will be an Original Issue Discount bond, and it will also have a 25-year maturity and a $1,000 par value, but its semiannual coupon will be only 6.25%. If both bonds are to provide investors with the same effective yield, how many of the OID bonds must Cosmic issue to raise $3,000,000? Disregard flotation costs, and round your final answer up to a whole number of bonds.

a. 4,228

b. 4,337

c. 4,448

d. 4,562

e. 4,676

FIN 534 Week 3 Homework Chapter 5

FIN 534 Week 3 Homework Chapter 5

FIN 534 Week 3 Homework Chapter 5

FIN 534 – Homework Chapter 5

1. Three $1,000 face value bonds that mature in 10 years have the same level of risk, hence their YTMs are equal. Bond A has an 8% annual coupon, Bond B has a 10% annual coupon, and Bond C has a 12% annual coupon. Bond B sells at par. Assuming interest rates remain constant for the next 10 years, which of the following statements is CORRECT?

a. Bond A’s current yield will increase each year.

b. Since the bonds have the same YTM, they should all have the same price, and since interest rates are not expected to change, their prices should all remain at their current levels until maturity.

c. Bond C sells at a premium (its price is greater than par), and its price is expected to increase over the next year.

d. Bond A sells at a discount (its price is less than par), and its price is expected to increase over the next year.

e. Over the next year, Bond A’s price is expected to decrease, Bond B’s price is expected to stay the same, and Bond C’s price is expected to increase.

2. Which of the following statements is CORRECT?

a. Two bonds have the same maturity and the same coupon rate. However, one is callable and the other is not. The difference in prices between the bonds will be greater if the current market interest rate is below the coupon rate than if it is above the coupon rate.

b. A callable 10-year, 10% bond should sell at a higher price than an otherwise similar noncallable bond.

c. Corporate treasurers dislike issuing callable bonds because these bonds may require the company to raise additional funds earlier than would be true if noncallable bonds with the same maturity were used.

d. Two bonds have the same maturity and the same coupon rate. However, one is callable and the other is not. The difference in prices between the bonds will be greater if the current market interest rate is above the coupon rate than if it is below the coupon rate.

e. The actual life of a callable bond will always be equal to or less than the actual life of a noncallable bond with the same maturity. Therefore, if the yield curve is upward sloping, the required rate of return will be lower on the callable bond.

3. Which of the following statements is CORRECT?

a. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yield and a higher capital gains yield than the par bond.

b. A bond’s current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.

c. If a bond sells at par, then its current yield will be less than its yield to maturity.

d. If a bond sells for less than par, then its yield to maturity is less than its coupon rate.

e. A discount bond’s price declines each year until it matures, when its value equals its par value.

4. Suppose a new company decides to raise a total of $200 million, with $100 million as common equity and $100 million as long-term debt. The debt can be mortgage bonds or debentures, but by an iron-clad provision in its charter, the company can never raise any additional debt beyond the original $100 million. Given these conditions, which of the following statements is CORRECT?

a. The higher the percentage of debt represented by mortgage bonds, the riskier both types of bonds will be and, consequently, the higher the firm’s total dollar interest charges will be.

b. If the debt were raised by issuing $50 million of debentures and $50 million of first mortgage bonds, we could be certain that the firm’s total interest expense would be lower than if the debt were raised by issuing $100 million of debentures.

c. In this situation, we cannot tell for sure how, or whether, the firm’s total interest expense on the $100 million of debt would be affected by the mix of debentures versus first mortgage bonds. The interest rate on each of the two types of bonds would increase as the percentage of mortgage bonds used was increased, but the result might well be such that the firm’s total interest charges would not be affected materially by the mix between the two.

d. The higher the percentage of debentures, the greater the risk borne by each debenture, and thus the higher the required rate of return on the debentures.

e. If the debt were raised by issuing $50 million of debentures and $50 million of first mortgage bonds, we could be certain that the firm’s total interest expense would be lower than if the debt were raised by issuing $100 million of first mortgage bonds.

5. Cosmic Communications Inc. is planning two new issues of 25-year bonds. Bond Par will be sold at its $1,000 par value, and it will have a 10% semiannual coupon. Bond OID will be an Original Issue Discount bond, and it will also have a 25-year maturity and a $1,000 par value, but its semiannual coupon will be only 6.25%. If both bonds are to provide investors with the same effective yield, how many of the OID bonds must Cosmic issue to raise $3,000,000? Disregard flotation costs, and round your final answer up to a whole number of bonds.

a. 4,228

b. 4,337

c. 4,448

d. 4,562

e. 4,676

FIN 534 Week 3 Homework Chapter 5

FIN 534 Week 4 Homework Chapter 7

FIN 534 Week 4 Homework Chapter 7

FIN 534 Week 4 Homework Chapter 7

1. Which of the following statements is CORRECT?

a. The constant growth model takes into consideration the capital gains investors expect to earn on a stock.

b. Two firms with the same expected dividend and growth rates must also have the same stock price.

c. It is appropriate to use the constant growth model to estimate a stock’s value even if its growth rate is never expected to become constant.

d. If a stock has a required rate of return %, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock’s dividend yield is also 5%.

e. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate.

2. Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?

A B

Price $25 $25

Expected growth (constant) 10% 5%

Required return 15% 15%

a. Stock A’s expected dividend at is only half that of Stock B.

b. Stock A has a higher dividend yield than Stock B.

c. Currently the two stocks have the same price, but over time Stock B’s price will pass that of A.

d. Since Stock A’s growth rate is twice that of Stock B, Stock A’s future dividends will always be twice as high as Stock B’s.

e. The two stocks should not sell at the same price. If their prices are equal, then a disequilibrium must exist.

3. Which of the following statements is CORRECT?

a. A major disadvantage of financing with preferred stock is that preferred stockholders typically have supernormal voting rights.

b. Preferred stock is normally expected to provide steadier, more reliable income to investors than the same firm’s common stock, and, as a result, the expected after-tax yield on the preferred is lower than the after-tax expected return on the common stock.

c. The preemptive right is a provision in all corporate charters that gives preferred stockholders the right to purchase (on a pro rata basis) new issues of preferred stock.

d. One of the disadvantages to a corporation of owning preferred stock is that 70% of the dividends received represent taxable income to the corporate recipient, whereas interest income earned on bonds would be tax free.

Estimated %(must be changed to force Calculated Price to equal the Actual Market Price)$15.00Year012345Dividend growth rate (insert correct values)10%10%10%5%5%Calculated dividends (D0 has been paid)$1.00????? = D4/(rs − g4). Find using Estimated rs. ?Total CFs???PVs of CFs when discounted at Estimated rs???Calculated = Sum of PVs =$0.00 A positive number will be here when dividends are estimated. The Calculated Price will equal the Actual Market Price once the correct rs has been found.Rapid growthActual Market Price, P0:Normal growth

e. One of the advantages to financing with preferred stock is that 70% of the dividends paid out are tax deductible to the issuer.

4. Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., The company’s last dividend, D, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?

a. $26.77

b. $27.89

c. $29.05

d. $30.21

e. $31.42

5. Your boss, Sally Maloney, treasurer of Fred Clark Enterprises (FCE), asked you to help her estimate the intrinsic value of the company’s stock. FCE just paid a dividend of $1.00, and the stock now sells for $15.00 per share. Sally asked a number of security analysts what they believe FCE’s future dividends will be, based on their analysis of the company. The consensus is that the dividend will be increased by 10% during Years 1 to 3, and it will be increased at a rate of 5% per year in Year 4 and thereafter. Sally asked you to use that information to estimate the required rate of return on the stock, rs, and she provided you with the following template for use in the analysis.Sally told you that the growth rates in the template were just put in as a trial, and that you must replace them with the analysts’ forecasted rates to get the correct forecasted dividends and then the estimated TV. She also notes that the estimated value for rs, at the top of the template, is also just a guess, and you must replace it with a value that will cause the Calculated Price shown at the bottom to equal the Actual Market Price. She suggests that, after you have put in the correct dividends, you can manually calculate the price, using a series of guesses as to the Estimated rs. The value of rs that causes the calculated price to equal the actual price is the correct one. She notes, though, that this trial-and-error process would be quite tedious, and that the correct rs could be found much faster with a simple Excel model, especially if you use Goal Seek. What is the value of rs?

a. 11.84%

b. 12.21%

c. 12.58%

d. 12.97%

e. 13.36%

FIN 534 Week 4 Homework Chapter 7

FIN 534 Week 4 Homework Chapter 7

FIN 534 Week 4 Homework Chapter 7

FIN 534 Week 4 Homework Chapter 7

1. Which of the following statements is CORRECT?

a. The constant growth model takes into consideration the capital gains investors expect to earn on a stock.

b. Two firms with the same expected dividend and growth rates must also have the same stock price.

c. It is appropriate to use the constant growth model to estimate a stock’s value even if its growth rate is never expected to become constant.

d. If a stock has a required rate of return %, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock’s dividend yield is also 5%.

e. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate.

2. Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?

A B

Price $25 $25

Expected growth (constant) 10% 5%

Required return 15% 15%

a. Stock A’s expected dividend at is only half that of Stock B.

b. Stock A has a higher dividend yield than Stock B.

c. Currently the two stocks have the same price, but over time Stock B’s price will pass that of A.

d. Since Stock A’s growth rate is twice that of Stock B, Stock A’s future dividends will always be twice as high as Stock B’s.

e. The two stocks should not sell at the same price. If their prices are equal, then a disequilibrium must exist.

3. Which of the following statements is CORRECT?

a. A major disadvantage of financing with preferred stock is that preferred stockholders typically have supernormal voting rights.

b. Preferred stock is normally expected to provide steadier, more reliable income to investors than the same firm’s common stock, and, as a result, the expected after-tax yield on the preferred is lower than the after-tax expected return on the common stock.

c. The preemptive right is a provision in all corporate charters that gives preferred stockholders the right to purchase (on a pro rata basis) new issues of preferred stock.

d. One of the disadvantages to a corporation of owning preferred stock is that 70% of the dividends received represent taxable income to the corporate recipient, whereas interest income earned on bonds would be tax free.

Estimated %(must be changed to force Calculated Price to equal the Actual Market Price)$15.00Year012345Dividend growth rate (insert correct values)10%10%10%5%5%Calculated dividends (D0 has been paid)$1.00????? = D4/(rs − g4). Find using Estimated rs. ?Total CFs???PVs of CFs when discounted at Estimated rs???Calculated = Sum of PVs =$0.00 A positive number will be here when dividends are estimated. The Calculated Price will equal the Actual Market Price once the correct rs has been found.Rapid growthActual Market Price, P0:Normal growth

e. One of the advantages to financing with preferred stock is that 70% of the dividends paid out are tax deductible to the issuer.

4. Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., The company’s last dividend, D, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?

a. $26.77

b. $27.89

c. $29.05

d. $30.21

e. $31.42

5. Your boss, Sally Maloney, treasurer of Fred Clark Enterprises (FCE), asked you to help her estimate the intrinsic value of the company’s stock. FCE just paid a dividend of $1.00, and the stock now sells for $15.00 per share. Sally asked a number of security analysts what they believe FCE’s future dividends will be, based on their analysis of the company. The consensus is that the dividend will be increased by 10% during Years 1 to 3, and it will be increased at a rate of 5% per year in Year 4 and thereafter. Sally asked you to use that information to estimate the required rate of return on the stock, rs, and she provided you with the following template for use in the analysis.Sally told you that the growth rates in the template were just put in as a trial, and that you must replace them with the analysts’ forecasted rates to get the correct forecasted dividends and then the estimated TV. She also notes that the estimated value for rs, at the top of the template, is also just a guess, and you must replace it with a value that will cause the Calculated Price shown at the bottom to equal the Actual Market Price. She suggests that, after you have put in the correct dividends, you can manually calculate the price, using a series of guesses as to the Estimated rs. The value of rs that causes the calculated price to equal the actual price is the correct one. She notes, though, that this trial-and-error process would be quite tedious, and that the correct rs could be found much faster with a simple Excel model, especially if you use Goal Seek. What is the value of rs?

a. 11.84%

b. 12.21%

c. 12.58%

d. 12.97%

e. 13.36%

FIN 534 Week 4 Homework Chapter 7

FIN 534 Week 4 Homework Chapter 6

FIN 534 Week 4 Homework Chapter 6

FIN 534 Week 4 Homework Chapter 6

Business – Management

FIN 534 Homework Chapter 6

1. Which of the following statements is CORRECT?

a. If you add enough randomly selected stocks to a portfolio, you can completely eliminate all of the market risk from the portfolio.

b. If you were restricted to investing in publicly traded common stocks, yet you wanted to minimize the riskiness of your portfolio as measured by its beta, then according to the CAPM theory you should invest an equal amount of money in each stock in the market. That is, if there were 10,000 traded stocks in the world, the least risky possible portfolio would include some shares of each one.

c. If you formed a portfolio that consisted of all stocks with betas less than 1.0, which is about half of all stocks, the portfolio would itself have a beta coefficient that is equal to the weighted average beta of the stocks in the portfolio, and that portfolio would have less risk than a portfolio that consisted of all stocks in the market.

d. Market risk can be eliminated by forming a large portfolio, and if some Treasury bonds are held in the portfolio, the portfolio can be made to be completely riskless.

e. A portfolio that consists of all stocks in the market would have a required return that is equal to the riskless rate.

2. Jane has a portfolio of 20 average stocks, and Dick has a portfolio of 2 average stocks. Assuming the market is in equilibrium, which of the following statements is CORRECT?

a. Jane’s portfolio will have less diversifiable risk and also less market risk than Dick’s portfolio.

b. The required return on Jane’s portfolio will be lower than that on Dick’s portfolio because Jane’s portfolio will have less total risk.

c. Dick’s portfolio will have more diversifiable risk, the same market risk, and thus more total risk than Jane’s portfolio, but the required (and expected) returns will be the same on both portfolios.

d. If the two portfolios have the same beta, their required returns will be the same, but Jane’s portfolio will have less market risk than Dick’s.

e. The expected return on Jane’s portfolio must be lower than the expected return on Dick’s portfolio because Jane is more diversified.

3. Stock X has a beta of 0.7 and Stock Y has a beta of 1.3. The standard deviation of each stock’s returns is 20%. The stocks’ returns are independent of each other, i.e., the correlation coefficient, r, between them is zero. Portfolio P consists of 50% X and 50% Y. Given this information, which of the following statements is CORRECT?

a. Portfolio P has a standard deviation of 20%.

b. The required return on Portfolio P is equal to the market risk premium (rM − rRF).

c. Portfolio P has a beta of 0.7.

d. Portfolio P has a beta of 1.0 and a required return that is equal to the riskless rate, rRF.

e. Portfolio P has the same required return as the market (rM).

4. Which of the following statements is CORRECT?

a. When diversifiable risk has been diversified away, the inherent risk that remains is market risk, which is constant for all stocks in the market.

b. Portfolio diversification reduces the variability of returns on an individual stock.

c. Risk refers to the chance that some unfavorable event will occur, and a probability distribution is completely described by a listing of the likelihoods of unfavorable events.

d. The SML relates a stock’s required return to its market risk. The slope and intercept of this line cannot be controlled by the firms’ managers, but managers can influence their firms’ positions on the line by such actions as changing the firm’s capital structure or the type of assets it employs.

e. A stock with a beta of -1.0 has zero market risk if held in a 1-stock portfolio.

5. Which of the following statements is CORRECT?

a. If Mutual Fund A held equal amounts of 100 stocks, each of which had a beta of 1.0, and Mutual Fund B held equal amounts of 10 stocks with betas of 1.0, then the two mutual funds would both have betas of 1.0. Thus, they would be equally risky from an investor’s standpoint, assuming the investor’s only asset is one or the other of the mutual funds.

b. If investors become more risk averse but rRF does not change, then the required rate of return on high-beta stocks will rise and the required return on low-beta stocks will decline, but the required return on an average-risk stock will not change.

c. An investor who holds just one stock will generally be exposed to more risk than an investor who holds a portfolio of stocks, assuming the stocks are all equally risky. Since the holder of the 1-stock portfolio is exposed to more risk, he or she can expect to earn a higher rate of return to compensate for the greater risk.

d. There is no reason to think that the slope of the yield curve would have any effect on the slope of the SML.

e. Assume that the required rate of return on the market, rM, is given and fixed at 10%. If the yield curve were upward sloping, then the Security Market Line (SML) would have a steeper slope if 1-year Treasury securities were used as the risk-free rate than if 30-year Treasury bonds were used for rRF.

FIN 534 Week 4 Homework Chapter 6

FIN 534 Week 4 Homework Chapter 6

FIN 534 Week 4 Homework Chapter 6

FIN 534 Week 4 Homework Chapter 6

Business – Management

FIN 534 Homework Chapter 6

1. Which of the following statements is CORRECT?

a. If you add enough randomly selected stocks to a portfolio, you can completely eliminate all of the market risk from the portfolio.

b. If you were restricted to investing in publicly traded common stocks, yet you wanted to minimize the riskiness of your portfolio as measured by its beta, then according to the CAPM theory you should invest an equal amount of money in each stock in the market. That is, if there were 10,000 traded stocks in the world, the least risky possible portfolio would include some shares of each one.

c. If you formed a portfolio that consisted of all stocks with betas less than 1.0, which is about half of all stocks, the portfolio would itself have a beta coefficient that is equal to the weighted average beta of the stocks in the portfolio, and that portfolio would have less risk than a portfolio that consisted of all stocks in the market.

d. Market risk can be eliminated by forming a large portfolio, and if some Treasury bonds are held in the portfolio, the portfolio can be made to be completely riskless.

e. A portfolio that consists of all stocks in the market would have a required return that is equal to the riskless rate.

2. Jane has a portfolio of 20 average stocks, and Dick has a portfolio of 2 average stocks. Assuming the market is in equilibrium, which of the following statements is CORRECT?

a. Jane’s portfolio will have less diversifiable risk and also less market risk than Dick’s portfolio.

b. The required return on Jane’s portfolio will be lower than that on Dick’s portfolio because Jane’s portfolio will have less total risk.

c. Dick’s portfolio will have more diversifiable risk, the same market risk, and thus more total risk than Jane’s portfolio, but the required (and expected) returns will be the same on both portfolios.

d. If the two portfolios have the same beta, their required returns will be the same, but Jane’s portfolio will have less market risk than Dick’s.

e. The expected return on Jane’s portfolio must be lower than the expected return on Dick’s portfolio because Jane is more diversified.

3. Stock X has a beta of 0.7 and Stock Y has a beta of 1.3. The standard deviation of each stock’s returns is 20%. The stocks’ returns are independent of each other, i.e., the correlation coefficient, r, between them is zero. Portfolio P consists of 50% X and 50% Y. Given this information, which of the following statements is CORRECT?

a. Portfolio P has a standard deviation of 20%.

b. The required return on Portfolio P is equal to the market risk premium (rM − rRF).

c. Portfolio P has a beta of 0.7.

d. Portfolio P has a beta of 1.0 and a required return that is equal to the riskless rate, rRF.

e. Portfolio P has the same required return as the market (rM).

4. Which of the following statements is CORRECT?

a. When diversifiable risk has been diversified away, the inherent risk that remains is market risk, which is constant for all stocks in the market.

b. Portfolio diversification reduces the variability of returns on an individual stock.

c. Risk refers to the chance that some unfavorable event will occur, and a probability distribution is completely described by a listing of the likelihoods of unfavorable events.

d. The SML relates a stock’s required return to its market risk. The slope and intercept of this line cannot be controlled by the firms’ managers, but managers can influence their firms’ positions on the line by such actions as changing the firm’s capital structure or the type of assets it employs.

e. A stock with a beta of -1.0 has zero market risk if held in a 1-stock portfolio.

5. Which of the following statements is CORRECT?

a. If Mutual Fund A held equal amounts of 100 stocks, each of which had a beta of 1.0, and Mutual Fund B held equal amounts of 10 stocks with betas of 1.0, then the two mutual funds would both have betas of 1.0. Thus, they would be equally risky from an investor’s standpoint, assuming the investor’s only asset is one or the other of the mutual funds.

b. If investors become more risk averse but rRF does not change, then the required rate of return on high-beta stocks will rise and the required return on low-beta stocks will decline, but the required return on an average-risk stock will not change.

c. An investor who holds just one stock will generally be exposed to more risk than an investor who holds a portfolio of stocks, assuming the stocks are all equally risky. Since the holder of the 1-stock portfolio is exposed to more risk, he or she can expect to earn a higher rate of return to compensate for the greater risk.

d. There is no reason to think that the slope of the yield curve would have any effect on the slope of the SML.

e. Assume that the required rate of return on the market, rM, is given and fixed at 10%. If the yield curve were upward sloping, then the Security Market Line (SML) would have a steeper slope if 1-year Treasury securities were used as the risk-free rate than if 30-year Treasury bonds were used for rRF.

FIN 534 Week 4 Homework Chapter 6

Homework Project: In the News

Homework Project: In the News

These projects are intended to provide current material for class discussion and review. To receive full credit for this requirement, each student should turn in an In the News . . . project during Week 4. This project is due in Week 4 and is worth 70 points. The project may draw on items from the online environment—newspapers, magazines, and websites—to provide current (i.e., within the last year) examples of course-related topics (i.e., advertising or public relations). Creativity, relevance, and probable interest to the class are especially welcome. As an example, a recent article on the meaning and use of color in advertising provides a useful document that could be accompanied by some examples of advertising that demonstrate effective and/or ineffective use of color.

These items should be accompanied by a one-page report (use bullet points), explaining

why and how the material is important and relevant to the course content; and

what practical managerial implications the material has.

Submit your assignment to the Dropbox located on the silver tab at the top of this page. For instructions on how to use the Dropbox, read these step-by-step instructions or watch this Dropbox Tutorial.

See the Syllabus section “Due Dates for Assignments & Exams” for due date information

Homework Project: In the News

Homework Project: In the News

Homework Project: In the News

These projects are intended to provide current material for class discussion and review. To receive full credit for this requirement, each student should turn in an In the News . . . project during Week 4. This project is due in Week 4 and is worth 70 points. The project may draw on items from the online environment—newspapers, magazines, and websites—to provide current (i.e., within the last year) examples of course-related topics (i.e., advertising or public relations). Creativity, relevance, and probable interest to the class are especially welcome. As an example, a recent article on the meaning and use of color in advertising provides a useful document that could be accompanied by some examples of advertising that demonstrate effective and/or ineffective use of color.

These items should be accompanied by a one-page report (use bullet points), explaining

why and how the material is important and relevant to the course content; and

what practical managerial implications the material has.

Submit your assignment to the Dropbox located on the silver tab at the top of this page. For instructions on how to use the Dropbox, read these step-by-step instructions or watch this Dropbox Tutorial.

See the Syllabus section “Due Dates for Assignments & Exams” for due date information

Homework Project: In the News

Homework Project: Radio Spot

Homework Project: Radio Spot

MKTG 410

Homework Project: Radio Spot

Assume you are the account executive for an advertising agency. You are competing with other agencies to produce a local radio spot. Choose a company for the assignment—three possibilities are listed below.

Dry cleaning service

Bakery

Bicycle shop

Deliverables

For your chosen company, create a one- to two-page campaign strategy that includes the following elements:

Describe the target audience for the product. Include customer demographics and purchase behavior. Explain the media habits of this audience. During what time slot would you try to reach this audience? What kind of radio station format (music, talk, other) would you recommend using to reach this audience?

Describe your creative approach, big idea and story angle for the radio spot. How will you capture attention, engage the audience, and make a call to action?

Include the script for the radio spot. In addition to spoken words, include production details, such as the personality of the speaker(s), supporting sound effects, or music. Read your script aloud and practice the timing in an effort to make the script run about 30 seconds.

Submit your assignment to the Dropbox located on the silver tab at the top of this page. For instructions on how to use the Dropbox, read these step-by-step instructions or watch this Dropbox Tutorial.

Homework Project: Radio Spot

Study 3: Zappos: Delivering Customer Satisfaction

Study 3: Zappos: Delivering Customer Satisfaction

Study 3: Zappos: Delivering Customer Satisfaction

Due Week 9 and worth 200 points

Read the Zappos: Delivering Customer Satisfaction case,

Write a four to six (4-6) page paper in which you:

1.Analyze the manner in which Zappos leadership has fostered a culture of ethicalness in the company. Suggest two (2) actions that other companies can take in order to mimic this culture.

2.Determine the major impacts that Zappos leadership and ethical practices philosophy have had on its stakeholders.

3.Examine three (3) of the ethical challenges that Zappos faces. Recommend three (3) actions that Zappos leadership should take in order to address these ethical challenges.

4.Evaluate the effectiveness of the core values in relation to developing a culture of ethicalness. Determine the manner in which the core values support the stakeholder perspective.

5.Analyze the major ethical challenges that Zappos has faced. Determine whether or not you would have resolved these challenges differently than Zappos management. Provide a rationale for your response.

6.Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other similar Websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

•Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

•Include a cover page containing the title of the assignment, the students name, the professors name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

•Examine ethical issues and dilemmas in business.

•Analyze scenarios to determine the ethical character of decisions made and the related impact on the organization.

•Examine the significant issues of an ethical controversy in business to moral philosophy and values.

•Write clearly and concisely about issues in ethics and advocacy for HR professionals using correct grammar and mechanics.

•Use technology and information resources to research issues in business ethics and advocacy for HR professionals.

Study 3: Zappos: Delivering Customer Satisfaction

Study 3: Zappos: Delivering Customer Satisfaction

Study 3: Zappos: Delivering Customer Satisfaction

Study 3: Zappos: Delivering Customer Satisfaction

Due Week 9 and worth 200 points

Read the Zappos: Delivering Customer Satisfaction case,

Write a four to six (4-6) page paper in which you:

1.Analyze the manner in which Zappos leadership has fostered a culture of ethicalness in the company. Suggest two (2) actions that other companies can take in order to mimic this culture.

2.Determine the major impacts that Zappos leadership and ethical practices philosophy have had on its stakeholders.

3.Examine three (3) of the ethical challenges that Zappos faces. Recommend three (3) actions that Zappos leadership should take in order to address these ethical challenges.

4.Evaluate the effectiveness of the core values in relation to developing a culture of ethicalness. Determine the manner in which the core values support the stakeholder perspective.

5.Analyze the major ethical challenges that Zappos has faced. Determine whether or not you would have resolved these challenges differently than Zappos management. Provide a rationale for your response.

6.Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other similar Websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

•Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

•Include a cover page containing the title of the assignment, the students name, the professors name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

•Examine ethical issues and dilemmas in business.

•Analyze scenarios to determine the ethical character of decisions made and the related impact on the organization.

•Examine the significant issues of an ethical controversy in business to moral philosophy and values.

•Write clearly and concisely about issues in ethics and advocacy for HR professionals using correct grammar and mechanics.

•Use technology and information resources to research issues in business ethics and advocacy for HR professionals.

Study 3: Zappos: Delivering Customer Satisfaction

Term Paper: Website Migration Project

Term Paper: Website Migration Project

Term Paper: Website Migration Project

Due Week 10 and worth 200 points Tony’s Chips has recently been sold to a new independent company. The new company has hired you to manage a project that will move the old Website from an externally hosted solution to an internal one. The company’s leadership is very concerned about redundancy for their site, insisting that a back-up site be available as a failover in case the main site goes down. In addition, they want the site redesigned to allow customers to order products online.

As part of your job, you must complete a 10-to-15 page paper that follows this project through the system development life cycle (SDLC). This assignment will require you to do the following:

•Discuss what it will take to build a Web architecture, move an existing Website with minimal downtime, and provide a disaster recovery solution to ensure the site is always available.

◦The Web architecture should describe and justify operating system choices (i.e., Linux, Apache, MYSQL, PHP, Windows, IIS, SQL, etc.).

•Evaluate alternatives to the company self-hosting the site.

•Build a Gantt chart using Microsoft Project or equivalent software, showing all tasks associated with implementing the Website.

•The chart should include a minimum of five (5) tasks, each with three (3) sub-tasks.

•Explain and justify the system architecture you have selected.

•Illustrate the system architecture using Visio or equivalent software.

•Create a use case that documents the event of a customer ordering a bag of chips from the new Website.

•The use case should include a graphical representation using Visio or equivalent software and a text description of the events.

•Discuss the support operations that the internally hosted Website will require after implementation.

•Explain how you will evaluate the performance of the new site and the success of your project.

The specific Course Learning Outcomes associated with this assignment are:

•Design high-level logical system characteristics (user interface design, design of data, and information requirements).

•Use contemporary CASE tools in process and data modeling.

•Use technology and information resources to research issues in systems analysis and development.

•Write clearly and concisely about Systems Analysis and Development topics using proper writing mechanics and technical style conventions.

Term Paper: Website Migration Project

Marketing Your Business paper Assignment

Marketing Your Business paper Assignment

Write a 1,050 – 1,400 word paper on the key areas of marketing, using the industry and business opportunity you have been writing about in the previous Learning Team assignments. The key areas of marketing are product, pricing strategies, place, customer relationships, promotion, and technology. In the paper, you must complete the following:

. Select an appropriate distribution channel for a product or service and provide the rationale for the recommendation.

. Create a pricing strategy.

. Determine the level of relationship marketing that would be appropriate.

. Develop an appropriate advertising and promotion strategy.

. Identify the best uses for technology in terms of marketing the product or service.

Format your paper consistent with APA guidelines.

Marketing Your Business paper Assignment

Marketing Your Business paper Assignment

Marketing Your Business paper Assignment

Write a 1,050 – 1,400 word paper on the key areas of marketing, using the industry and business opportunity you have been writing about in the previous Learning Team assignments. The key areas of marketing are product, pricing strategies, place, customer relationships, promotion, and technology. In the paper, you must complete the following:

. Select an appropriate distribution channel for a product or service and provide the rationale for the recommendation.

. Create a pricing strategy.

. Determine the level of relationship marketing that would be appropriate.

. Develop an appropriate advertising and promotion strategy.

. Identify the best uses for technology in terms of marketing the product or service.

Format your paper consistent with APA guidelines.

Marketing Your Business paper Assignment