Investment Homework/Formula Calculation Help Needed
Sheet1
| Assume a particular stock has an annual standard deviation of 41 percent. What is the standard deviation for a four-month period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) | |||
| Answer | |||
Sheet2
| Assume the monthly standard deviation of a stock is 8.60 percent. What is the annual standard deviation of the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) | Assume the monthly standard deviation of a stock is 9.20 percent. What is the annual standard deviation of the stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) | ||
| Explanation | |||
| 0.0071666667 | 0.78% | ||
| 0.3186973486 | |||
| nnual standard deviation = monthly standard deviation/ (T)^(1/2) | |||
| Annual standard deviation = 9.40%/(1/12)^(1/2) | |||
| Annual standard deviation = 32.56% |
Sheet3
| Problem 13-3 | |||||
| Consider the following information concerning three portfolios, the market portfolio, and the risk-free asset: | |||||
| Portfolio | RP | σP | βP | ||
| X | 15 | % | 31 | % | 1.85 |
| Y | 14 | 26 | 1.25 | ||
| Z | 8.3 | 16 | .85 | ||
| Market | 11.2 | 21 | 1.00 | ||
| Risk-free | 4.8 | 0 | 0 | ||
| What is the Sharpe ratio, Treynor ratio, and Jensen’s alpha for each portfolio? (Negative values should be indicated by a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Do not round intermediate calculations. Round your Sharpe ratio answers and Treynor ratio answers to 5 decimal places and Jensen’s alpha answers to 2 decimal places. Omit the “%” sign in your response.) | |||||
| Portfolio | Sharpe Ratio | Treynor Ratio | Jensen’s Alpha | ||
| X | % | ||||
| Y | % | ||||
| Z | % | ||||
| Market | % |
Sheet4
| Problem 13-4 | |||
| Consider the following information concerning three portfolios, the market portfolio, and the risk-free asset: | |||
| Portfolio | RP | σP | βP |
| X | 11% | 33% | 1.45 |
| Y | 10 | 28 | 1.20 |
| Z | 8.1 | 18 | .75 |
| Market | 10.4 | 23 | 1.00 |
| Risk-free | 5.2 | 0 | .00 |
| Assume that the tracking error of Portfolio X is 9.10 percent. What is the information ratio for Portfolio X?(Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 4 decimal places.) | |||
| Information ratio (Answer) |
Sheet5
| Problem 13-5 | |||
| Consider the following information concerning three portfolios, the market portfolio, and the risk-free asset: | |||
| Portfolio | RP | σP | βP |
| X | 14% | 20% | 1.80 |
| Y | 13 | 15 | 1.30 |
| Z | 9.2 | 5 | .85 |
| Market | 11.1 | 10 | 1.00 |
| Risk-free | 6.6 | 0 | 0 |
| Assume that the correlation of returns on Portfolio Y to returns on the market is .80. What is the percentage of Portfolio Y’s return that is driven by the market? (Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) | |||
| Y’s return explained by market | % |
Sheet6
| Problem 13-6 | ||||
| The Layton Growth Fund has an alpha of 2.1 percent. You have determined that Layton’s information ratio is .50. What must Layton’s tracking error be relative to its benchmark? (Enter your answer as a percent rounded to 1 decimal place. Omit the “%” sign in your response.) | The Layton Growth Fund has an alpha of 1.7 percent. You have determined that Layton’s information ratio is .20. What must Layton’s tracking error be relative to its benchmark? (Enter your answer as a percent rounded to 1 decimal place. Omit the “%” sign in your response.) | |||
| Tracking error | % | |||
| Explanation: | ||||
| TE = 2.1% / .50 = 4.2% | ||||
| 0.042 | 0.085 |
Sheet7
| Problem 13-13 | |
| 1 | A stock has an annual return of 11 percent and a standard deviation of 44 percent. What is the smallest expected loss over the next year with a probability of 1 percent? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) |
| Smallest expected loss | % |
Sheet8
| Problem 13-14 | ||
| a. | A stock has an annual return of 15 percent and a standard deviation of 58 percent. What is the smallest expected gain over the next year with a probability of 2.5 percent? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) | |
| Smallest expected gain | % | |
| b. | Does this number make sense? | |
| Yes | ||
| No |
Sheet9
| Problem 13-19 | |||
| Consider the following information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. | |||
| Year | Fund | Market | Risk-Free |
| 2008 | –23.00% | –43.5% | 3% |
| 2009 | 25.1 | 21.4 | 5 |
| 2010 | 14.3 | 15.1 | 2 |
| 2011 | 6.8 | 8.8 | 6 |
| 2012 | –2.34 | –5.2 | 2 |
| What are the Sharpe and Treynor ratios for the fund? (Do not round intermediate calculations. Round your answers to 4 decimal places.) | |||
| Sharpe ratio | |||
| Treynor ratio |
Sheet10
| Problem 13-20 | |||
| Consider the following information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .87. | |||
| Year | Fund | Market | Risk-Free |
| 2008 | –18.20% | –35.5% | 2% |
| 2009 | 25.1 | 20.6 | 5 |
| 2010 | 13.5 | 12.7 | 2 |
| 2011 | 6.8 | 8.4 | 6 |
| 2012 | –1.86 | –4.2 | 3 |
| Calculate Jensen’s alpha for the fund, as well as its information ratio. (Do not round intermediate calculations. Round your Jensen’s alpha answer to 2 decimal places and Information ratio answer to 4 decimal places. Omit the “%” sign in your response.) | |||
| Jensen’s alpha | % | ||
| Information ratio |
#13
| Problem 17-3 | |||
| You are given the following information for Smashville, Inc. | |||
| Cost of goods sold: | $ | 209,000 | |
| Investment income: | $ | 2,100 | |
| Net sales: | $ | 392,000 | |
| Operating expense: | $ | 90,000 | |
| Interest expense: | $ | 7,400 | |
| Dividends: | $ | 14,000 | |
| Tax rate: | 35 | % | |
| Current liabilities: | $ | 22,000 | |
| Cash: | $ | 21,000 | |
| Long-term debt: | $ | 27,000 | |
| Other assets: | $ | 37,000 | |
| Fixed assets: | $ | 128,000 | |
| Other liabilities: | $ | 5,000 | |
| Investments: | $ | 41,000 | |
| Operating assets: | $ | 35,000 | |
| Calculate the gross margin, the operating margin, return on assets, and return on equity. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) | |||
| Gross margin | % | ||
| Operating margin | % | ||
| Return on assets | % | ||
| Return on equity | % |
#14
| Problem 17-4 | |||
| You are given the following information for Smashville, Inc. | |||
| Cost of goods sold: | $ | 119,000 | |
| Investment income: | $ | 2,300 | |
| Net sales: | $ | 232,000 | |
| Operating expense: | $ | 40,000 | |
| Interest expense: | $ | 7,400 | |
| Dividends: | $ | 11,000 | |
| Tax rate: | 40 | % | |
| Current liabilities: | $ | 18,000 | |
| Cash: | $ | 21,000 | |
| Long-term debt: | $ | 25,000 | |
| Other assets: | $ | 39,000 | |
| Fixed assets: | $ | 126,000 | |
| Other liabilities: | $ | 5,000 | |
| Investments: | $ | 43,000 | |
| Operating assets: | $ | 45,000 | |
| During the year, Smashville, Inc., had 17,000 shares of stock outstanding and depreciation expense of $15,000. Calculate the book value per share, earnings per share, and cash flow per share. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the “$” sign in your response.) | |||
| Book value per share | $ | ||
| Earnings per share | $ | ||
| Cash flow per share | $ |
#15
| Problem 17-5 | |||
| You are given the following information for Smashville, Inc. | |||
| Cost of goods sold: | $ | 184,000 | |
| Investment income: | $ | 1,600 | |
| Net sales: | $ | 387,000 | |
| Operating expense: | $ | 88,000 | |
| Interest expense: | $ | 7,400 | |
| Dividends: | $ | 6,000 | |
| Tax rate: | 30 | % | |
| Current liabilities: | $ | 12,000 | |
| Cash: | $ | 21,000 | |
| Long-term debt: | $ | 32,000 | |
| Other assets: | $ | 40,000 | |
| Fixed assets: | $ | 125,000 | |
| Other liabilities: | $ | 5,000 | |
| Investments: | $ | 36,000 | |
| Operating assets: | $ | 64,000 | |
| During the year, Smashville, Inc., had 17,000 shares of stock outstanding and depreciation expense of $19,000. At the end of the year, Smashville stock sold for $42 per share. Calculate the price-book ratio, price-earnings ratio, and the price-cash flow ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.) | |||
| Price-book ratio | |||
| Price-earnings ratio | |||
| Price-cash flow ratio |
#16
| Problem 17-6 | ||||||
| The most recent financial statements for Bradley, Inc., are shown here (assuming no income taxes): | ||||||
| Income Statement | ||||||
| Sales | $ | 5,600 | ||||
| Costs | -4,200 | |||||
| Net income | $ | 1,400 | ||||
| Balance Sheet | ||||||
| Assets | $ | 16,420 | Debt | $ | 8,500 | |
| Equity | 7,920 | |||||
| Total | $ | 16,420 | Total | $ | 16,420 | |
| Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $6,552. What is the external financing needed? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole dollar. Omit the “$” sign in your response.) | ||||||
| EFN | $ |
#17
| Problem 17-7 | Problem 17-7 | ||
| Weston Corporation had earnings per share of $1.64, depreciation expense of $310,000, and 140,000 shares outstanding. What was the operating cash flow per share? If the share price was $43, what was the price-cash flow ratio? (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the “$” sign in your response.) | Weston Corporation had earnings per share of $1.96, depreciation expense of $484,500, and 190,000 shares outstanding. What was the operating cash flow per share? If the share price was $73, what was the price-cash flow ratio? (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the “$” sign in your response.) | ||
| Operating cash flow per share | $ | ||
| Price-cash flow | |||
| Explanation: | |||
| Depreciation per share = $310,000 / 140,000 = $2.21 | 2.55 | ||
| Operating cash flow per share = $1.64 + 2.21 = $3.85 | 4.51 | ||
| Price-cash flow = $43 / $3.85 = 11.16 | 16.19 |
#18
| Problem 17-8 | Problem 17-8 | |||||
| Alphonse Inc. has a return on equity of 12 percent, 28,000 shares of stock outstanding, and a net income of $98,000. What are earnings per share? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the “$” sign in your response.) | Alphonse Inc. has a return on equity of 16 percent, 30,000 shares of stock outstanding, and a net income of $101,500. What are earnings per share? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the “$” sign in your response.) | |||||
| EPS | $ | EPS | $ | |||
| Explanation: | ||||||
| EPS = $98,000 / 28,000 = $3.50 | 3.3833333333 |
#19
| Problem 17-9 | Problem 17-9 | |||
| Lemon Co. has net income of $520,000 and 75,000 shares of stock. If the company pays a dividend of $1.28 per share, what are the additions to retained earnings? (Do not round intermediate calculations. Round your answer to the nearest whole dollar. Omit the “$” sign in your response.) | Lemon Co. has net income of $620,000 and 70,000 shares of stock. If the company pays a dividend of $2.08 per share, what are the additions to retained earnings? (Do not round intermediate calculations. Round your answer to the nearest whole dollar. Omit the “$” sign in your response.) | |||
| Additions to retained earnings | $ | |||
| Explanation: | ||||
| Total dividends = $1.28 × 75,000 = $96,000 | 145600 | |||
| Addition to retained earnings = $520,000 – 96,000 = $424,000 | 474400 |
#20
| Problem 17-10 | ||
| Net income: | $ | 224 |
| Depreciation: | $ | 49 |
| Issuance of new stock: | $ | 7 |
| Repurchase of debt: | $ | 18 |
| Sale of property: | $ | 18 |
| Purchase of equipment: | $ | 80 |
| Dividend payments: | $ | 5 |
| Interest payments: | $ | 29 |
| Given the above information for Hetrich, Inc., calculate the operating cash flow, investment cash flow, financing cash flow, and net cash flow. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to the nearest whole dollar. Omit the “$” sign in your response.) | ||
| Operating cash flow | $ | |
| Investment cash flow | $ | |
| Financing cash flow | $ | |
| Net cash increase | $ |
#21
| Problem 17-11 | |||||
| The most recent financial statements for Martin, Inc., are shown here: | |||||
| Income Statement | |||||
| Sales | $ | 24,550 | |||
| Costs | -14,730 | ||||
| Taxable income | $ | 9,820 | |||
| Taxes (35%) | -3,437 | ||||
| Net income | $ | 6,383 | |||
| Balance Sheet | |||||
| Assets | $ | 93,290 | Debt | $ | 33,000 |
| Equity | 60,290 | ||||
| Total | $ | 93,290 | Total | $93,290 | |
| Assets and costs are proportional to sales. Debt and equity are not. A dividend of $955 was paid, and Martin wishes to maintain a constant payout ratio. Next year’s sales are projected to be $29,951. What is the external financing needed? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the “$” sign in your response.) | |||||
| EFN | $ |
Sheet22
| Problem 17-13 | |||||||||
| Amounts are in thousands of dollars (except number of shares and price per share): | |||||||||
| Kiwi Fruit Company Balance Sheet | Kiwi Fruit Company Income Statement | ||||||||
| Cash and equivalents | $ | 570 | Net sales | $ | 7,800 | ||||
| Operating assets | 650 | Cost of goods sold | -5900 | ||||||
| Property, plant, and equipment | 2,700 | ||||||||
| Other assets | 110 | ||||||||
| Gross profit | $ | 1,900 | |||||||
| Total assets | $ | 4,030 | Operating expense | -990 | |||||
| Current liabilities | $ | 920 | |||||||
| Long-term debt | 1,280 | Operating income | $ | 910 | |||||
| Other liabilities | 120 | Other income | 105 | ||||||
| Net interest expense | -200 | ||||||||
| Total liabilities | $ | 2,320 | |||||||
| Pretax income | $ | 815 | |||||||
| Paid in capital | $ | 340 | Income tax | -285 | |||||
| Retained earnings | 1,370 | ||||||||
| Total equity | $ | 1,710 | Net income | $ | 530 | ||||
| Total liabilities and equity | $ | 4,030 | |||||||
| Earnings per share | $ | 2 | |||||||
| Shares outstanding | 265,000 | ||||||||
| Recent price | $ | 34.5 | |||||||
| Explanation: | Calculations | ||||||||
| Return on assets (ROA) is $530 / $4,030 = 13.15% | Net income divided by total liab/equity | ||||||||
| Return on equity (ROE) is $530 / $1,710 = 30.99% | Net income divided by total equity |
#25
| Thorpe Mfg., Inc., is currently operating at only 75 percent of fixed asset capacity. Current sales are $480,000. How fast can sales grow before any new fixed assets are needed? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) | Thorpe Mfg., Inc., is currently operating at only 91 percent of fixed asset capacity. Current sales are $560,000. How fast can sales grow before any new fixed assets are needed? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the “%” sign in your response.) | ||||
| Maximum sales growth | % | ||||
| Explanation: | |||||
| Full capacity sales = $480,000 / .75 | 615385 | ||||
| Full capacity sales = $640,000 | |||||
| The maximum sales growth is the full capacity sales divided by the current sales, so: | |||||
| 9.89% | |||||
| Maximum sales growth = ($640,000 / $480,000) – 1 | |||||
| Maximum sales growth = .3333, or 33.33% |
Sheet24
| Problem 17-14 | ||
| Amounts are in thousands of dollars (except number of shares and price per share): | ||
| Kiwi Fruit Company Balance Sheet | ||
| Cash and equivalents | $ | 360 |
| Operating assets | 750 | |
| Property, plant, and equipment | 3,000 | |
| Other assets | 160 | |
| Total assets | $ | 4,270 |
| Current liabilities | $ | 980 |
| Long-term debt | 1,260 | |
| Other liabilities | 170 | |
| Total liabilities | $ | 2,410 |
| Paid in capital | $ | 390 |
| Retained earnings | 1,470 | |
| Total equity | $ | 1,860 |
| Total liabilities and equity | $ | 4,270 |
| Kiwi Fruit Company Income Statement | ||
| Net sales | $ | 8,000.00 |
| Cost of goods sold | (6,500.00) | |
| Gross profit | $ | 1,500.00 |
| Operating expense | (500.00) | |
| Operating income | $ | 1,000.00 |
| Other income | 155.00 | |
| Net interest expense | (200.00) | |
| Pretax income | $ | 955.00 |
| Income tax | (245.00) | |
| Net income | $ | 710.00 |
| Earnings per share | $ | 2.50 |
| Shares outstanding | 284,000.00 | |
| Recent price | $ | 26.00 |
| Kiwi Fruit Company Cash Flow Statement | ||
| Net income | $ | 710.00 |
| Depreciation and amortization | 300.00 | |
| Increase in operating assets | (60.00) | |
| Decrease in current liabilities | (114.00) | |
| Operating cash flow | $ | 836.00 |
| Net (purchase) sale of property | $ | 195.00 |
| Increase in other assets | (72.00) | |
| Investing cash flow | $ | 123.00 |
| Net (redemption) issuance of LTD | $ | (170.00) |
| Dividends paid | (180.00) | |
| Financing cash flow | $ | (350.00) |
| Net cash increase | $ | 609.00 |
| Calculate the price-book, price-earnings, and price-cash flow ratios for Kiwi Fruit. (Do not round intermediate calculations. Round your answers to 2 decimal places.) | ||
| Price-book ratio | ||
| Price-earnings ratio | ||
| Price-cash flow ratio |
Sheet26
| 455.58 | 695 | ||
| 56 | 60 | ||
| 40 | 40 | txt bk | |
| 40 | 40 | 7 | |
| 40 | 40 | 8 | |
| 68 | 125 | ||
| 699.58 | 1000 | 0.69958 |
4.2
4.2
3.85 ± 1%
3.85 ± 1%
11.16 ± 1%
11.16 ± 1%
3.50 ± 1%
3.50 ± 1%
424,000 ± .1%
424,000 ± .1%
33.33 ± 1%
33.33 ± 1%
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"
