Asset K has expected return of 12% and standard deviation of 18%. Asset M has expected return of 15% and standard deviation of 26%. If the two assets have a correlation coefficient of 0.7, what is their covariance?

Select one:

A.

0.018

B.

0.033

C.

0.070

D.

0.054

E.

0.038

If you run an asymmetry test and obtain a test statistic of -1.4, which conclusion can you make at the 5% significance level?

a.

The distribution is left-skewed, there are more black swans than yellow flamingos

b.

We cannot claim that the distribution is asymmetric

c.

The distribution is left-skewed, there are more extreme positive returns than extreme negative returns

d.

The distribution is right-skewed, there are more extreme negative returns than extreme positive returns

e.

The distribution is right-skewed, there are mor yellow flamingos than black swans

The Meriam Corp. is planning construction of a new shipping depot for its single manufacturing plant. The initial cost of the investment is $1 million. Efficiencies from the new depot are expected to reduce costs by $100,000 for each of the next 20 years. The corporation has a total value of $60 million and has outstanding debt of $40 million. What is the NPV of the project if the firm has an after tax cost of debt of 6% and a cost equity of 9%?

Select one:

A.

$59,901

B.

$60,401

C.

$59,401

D.

$69,901