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You have $133,000 in cash. You raise an additional $133,000 by selling short a stock with expected return of 9%. You invest the total amount of cash you now have in a stock with expected returns of 15%. What is the portfolio expected return?

Select one:

a. 8%

b. 21%

c. 17%

d. 10%

If the expected return on the market is 12%, the riskless rate is 4%, the standard deviation of market returns is 25%, the standard deviation of the stocks returns is 35% and the correlation coefficient of returns between the market and the stock is 0.8, what is the expected return for this stock?

Select one:

a. 12.96%

b. None of the above.

c. 11.50%

d. 6.72%

e. 14.32%

You are about to take over a car leasing company with Free Cash Flow to the Firm projected to be $9 million at the end of the next year. This is expected to grow by 2% in the following year, and forever thereafter. The firm owes the bank $20 million and has just lost a lawsuit making it liable to pay the complainant $5 million. The appropriate risk adjusted annual discount rate is 10%. How much is this company worth per share if there are 2 million shares outstanding?

Select one:

a. $43.75

b. $41.88

c. $39.03

d. $35.76