b) Based on the information in. Stewart Company Balance. Shest, assuming the po preferted. dividends werepald what is the return on comron equity? i) Based on the information in Stewart Company Balance Sheet, what is the fixed asset turnover fatio? j) Based on the information in Stewart Company Balance Sheet, what is the total asset turnover fatio? k) Based on the information in Stewart Company Balance Sheet, what the operating profit margin? D) Based on the information in Stewvart Company Balance Sheet, and assuming the company's stock price is $30 per share, what is the P/E ratio? m) Based on the information in Stewart Company Balance Sheet, what is the inventory turnorer ratio? 5) Andre's wonderful parents established a college savings plan for him when he was born. They deposited 550 into the account on the last day of each month. The account has earned 10.9% compounded monthly, tax-free. How much can they withdraw on his 18 th birthday to spend on his education? 6) You discover an antique in your attic that you purchased at an estate sale 10 years ago for \$400. You auction it on eBay and receive $8,000 for your item. What annual rate of return did you eam? 7) You bold a portfolio with the following securities: What is the expected return for the market, according to the CAPM? S) Answer the questions below using the following information on stocks A,B, and C. \begin{tabular}{|l|c|c|c|} \hline & A & B & C \\ \hline Expected Return & 20% & 21% & 10% \\ \hline Standard Deviation & 12% & 10% & 10% \\ \hline Beta & 1.8 & 22 & 0.8 \\ \hline \end{tabular} Assume the risk-free rate of return is 3% and the expected market return is 12% a. Calculate the required return for stocks A,B, and C. b. Assuming an imvestor with a well-diversified portfolio, which stock would the investor want to add to his portfolio? c. Assuming an investor who will invest all of his money into one security, which stock will the investor choose? 9) Security A has an expected rate of return of 29.8 percent and a beta of 3.1. Security B has a beta of 1.70. If the Treasury bill rate is 5 percent, what is the expected rate of return for Security B? 10) Bankers Corp. has a very conservative beta of .7, while Biotech Corp. has a beta of 2.1 Given that the T-bill rate is 5%, and the market is expected to retum 15%, what is the expected return of Bankers Corp., Biotech Corp., and a portfolio composed of 60% of Bankers Corp. and 40% Biotech Corp.? 11) FYI bonds have a par value of $1,000. The bonds pay $40 in interest every six months and will mature in 10 years. a. Calculate the price if the yield to maturity on the bonds is 7,8 , and 9 percent, respectively. b. Explain the impact on price if the required rate of return decreases: c. Compute the coupon rate on the bonds. How does the relationship between the coupon rate and the yield to maturity determine how a bond's price will compare to it par value? 12) Define interest rate risk. How does a bond's level of interest rate risk depend on its maturity? 13) Why does a bond sell at a discount when the coupon rate is lower than the required rate of return and vice versa
