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Could you answer the following finance question please C. (10 points) Analysis of past monthly movements in Wal-Mart's stock price has produced the following estimates:

Could you answer the following finance question please

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C. (10 points) Analysis of past monthly movements in Wal-Mart's stock price has produced the following estimates: a = -0.45 percent and B = 0.5. If the market index subsequently rises by 5 percent while Wal-Mart's stock price rises by 3 percent, what is the abnormal change in Wal-Mart's stock price? d. (10 points) Buying a call option, investing the present value of the exercise price in T-bills, and short-selling the underlying share is the same as i. buying a put and a share. ii. buying a call and a put. iii. buying a put. iv. selling a call. Explain.3. a. (6 points) Which of the following statements is FALSE? Explain i) Modigliani and Miller's conclusion verified the common view, which stated that even with perfect capital markets, leverage would affect a firm's value. ii) We can evaluate the relationship between risk and return more formally by computing the sensitivity of each security's return to the systematic risk of the economy. iii) Investors in levered equity require a higher expected return to compensate for its increased risk. iv) Leverage increases the risk of equity even when there is no risk that the firm will default. b. (7 points) Consider two firms: firm Without has no debt, and firm With has debt of $10,000 on which it pays interest of 5% per year. Both companies have identical projects that generate free cash flows of $1000 or $2000 each year. Suppose that there are no taxes, and after paying any interest on debt, both companies use all remaining cash free cash flows to pay dividends each year. i. Suppose you own 10% of the equity of Without. What is another portfolio you could hold that would provide you with the same exact cash flows? Fill in the table below showing the payments debt and equity holders of each firm will receive given each of the two possible levels of free cash flows: Without With Free Cash Interest Equity Interest Equity Flow Payments Dividends Payments Dividends 1000 2000 ii. Suppose you own 10% of the equity of Without. What is another portfolio you could hold that would provide you with the same exact cash flows

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