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Please show all work! See attachment there is 14 questions please show work and explain answer FIN 631 / Security Analysis & Portfolio Management Round

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Please show all work! See attachment there is 14 questions please show work and explain answer

image text in transcribed FIN 631 / Security Analysis & Portfolio Management Round numbers to four (4) significant decimal places; Show all your work; (1)Your company's stock sells for $150 per share, its last dividend was $3.00 per share, and its growth rate is 4%. What is the stock's required rate of return? (2)What is the stock's Beta if the average market return for the stock is 12%, and the interest yield on 10-year US Treasury Bonds is 4% and the required or expected rate of return is 20%? (3)The expected return for investment A is 10%, with a standard deviation of 1.2%. The expected return for investment B is 25%, with a standard deviation of 3%. Is B riskier than A? Answer "yes" or "no" AND then show your work and explain your answer. (4)A company's 12-month trailing earnings per share [EPS] are $4.50, and is expected to grow 10% annually. If an investor is willing to pay a P/E multiple that is no higher than 2.5 times its growth rate, and the stock is currently selling at $100 per share, would this be an acceptable purchase price? Explain and support your answer with numbers. (5)Given the following information, calculate the company's internal growth rate. Return on Equity = 21%; Dividend Payout Ratio = 15%. Given the following information, complete the problems #6 and #7. Stock Price Strike Price Days to Maturity By Days in Year Risk Free Rate Standard Deviation Variance of Return $22 $24 120/365 0.08 0.25 0.0625 (6)Use the Black-Scholes Model to calculate the theoretical Call option price. (7)Use the Black-Scholes Model to calculate the theoretical Put option price. (8)Calculate the Present Value of Growth Opportunities [PVGO] based on: Earnings Per Share = $8.00, Required Rate of Return = 14%, Dividends Per Share = $1.50, Return on Equity = 16%. (9)You own a bond portfolio and expect the market interest rate to increase for the foreseeable future. (a) What should you do with regards to the Duration of the portfolio and your own investment horizon? (b) What are the two reasons for doing so? (10)Briefly explain why the Black Scholes model is an accurate framework for estimating equilibrium, or correct prices (11)List the categories of strategies available to individual investors and professional managers used for bond portfolios. (12)You own a bond portfolio and expect the market rate of interest to decrease for the foreseeable future. (a) What should you do with regards to the Duration of the portfolio and your own investment horizon? (b) What are the two reasons for doing so? (13) Which of the following involve the asset allocation decision? 1) What asset classes should be considered for investment? 2) What policy weights should be assigned to each eligible asset class? 3) What are the allowable allocation ranges based on policy weights? 4) What specific securities or funds should be purchased for the portfolio? Calculate duration for a bond based on the following: time to maturity = 7 years, required rate of return = 8.25% and coupon rate = 3.75%. (a)5.164 (b)5.768 (c)5.984 (d)6.164 (e)6.262 (f)6.468

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