1. ABC pizzeria issued 10-year bonds one year ago at a coupon of 6.0%. If the YTM on these bonds is 7.4%, what is the current bond price?
2. You have just found an 8 percent coupon bond on the market with YTM equal to 6.4 percent selling for $1081.08. How many years do these bonds have until they mature?
3. What is the modified duration of a 7 percent coupon bond with 6 years to maturity and a current price of $1025.3?
4. Calculate the expected return portfolio that comprises of 50% ABC Inc (E(R) = 14%) and 50% XYZ inc. (E(R)=10% )
5. Calculate the std deviation of portfolio that comprises of 50% ABC Inc (Stdev = 42%) and 50% XYZ inc. (Stdev=31% ) when correlation between the two is 0.2.
6. Using information from questions 4 and 5. For what weight of ABC inc will the portfolio have minimum variance?
7. The expected return on a stock with a beta of 1.2 is 11%. If the risk-free rate is 4.5%, what is the market risk premium?
8. A stock has a beta of 1.1 and an expected return of 12%. The risk-free asset currently earns 2%. If a portfolio of the two assets has a beta of 1.65 what is the weight of the stock in the portfolio and expected return of the portfolio?
9. The expected return for ABC inc. and XYZ inc. according to equity analysts is 13.25% and 10.05%. If the betas for the two stocks is 1.2 and 0.9 respectively, and the return on the market is 11.5 %. Are the stocks over, under, or fairly valued?
10. Which is a superior metric: Sharpe or Treynor and why?