Anowhere the questions bellow they are very urgent, show the calculations step by step

When two companies are combined, a ratio of exchange occurs, denoting the relative weighting of the firms. The ratio of exchange can be considered in respect to earnings, market prices and the book values of the two companies involved. Earnings In evaluating possible acquisition, the acquiring firm must at least consider the effect the merger will have on the earnings per share of the surviving company. We can discuss this through an illustration: Illustration (4.1) Company A is considering the acquisition by shares of Company B. The following information is also available. Company A Company B Present earnings Shs 20,000,000 Shs 5,000,000 Shares 5,000,000 2,000,000 Earnings per share Shs 4 Shs 2.50 Price/earning ratio 16 12 Price of shares Sh 64 Sh 30 Company B has agreed to an offer of Shs 35 a share to be paid in Company A shares. REQUIRED: Consider the effect of the acquisition to the earnings per share.QUESTION ONE Securities D. E and F have the following characteristics with respect to expected return, standard deviation and correlation coefficients. Security Expected Return Standard Deviation Correlation Coefficient D - E D - F E - F D 0.08 0.02 0.4 LL.G E 0.15 0.16 0.4 0.8 0.12 0.08 0.6 0.8 REQUIRED: Compute the expected rate of return and standard deviation of a portfolio comprised of equal investment in each security. QUESTION TWO The risk free rate is 10% and the expected return on the market portfolio is 15%. The expected returns for 4 securities are listed below together with their expected betas SECURITY EXPECTED RETURN EXPECTED BETA 17.0% 1.3 14.5% 0.8 15.5% 1.1 1810% 1.7 REQUIRED: a. On the basis of these expectations, which securities are overvalued? Which are undervalued? b. If the risk-free rate were to rise to 12% and the expected return on the market portfolio rose to 16%, which securities would be overvalued? which would be under-valued? (Assume the expected returns and the betas remain the same). QUESTION THREE XYZ lid. is considering three possible capital projects for next year. Each project has a 1 year life, and project returns depend on next years state of the economy. The estimated rates of return are shown below. STATE OF THE PROBABILITY RATE OF RETURN ECONOMY OF OCCURRENCE A B C Recession 0.25 10%% 9 %% 14% Average 0.50 14 13 12 BOOM 0.25 16 18 10 REQUIRED: Find each project expected rate of return, variance, standard deviation and coefficient of variation.b. Compute the correlation coefficient between A and B 11. A and C B and C C. Compute the expected return on a portfolio if the firm invests equal wealth on each asset. d. Compute the standard deviation of the portfolio