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Quick answer Please QUESTIONS 1. According to the information in the table given below, fill in the blanks with correct option: Moderate Risk-Profitability / Low

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QUESTIONS 1. According to the information in the table given below, fill in the blanks with correct option: Moderate Risk-Profitability / Low Risk-Profitability / High Risk-Profitability (20p) Asset Maturity Financing Maturity Short Term Long Term Short Term 1(?) 2(?) Long Term 3(?) 4(?) 2. Delphi Products Corporation currently pays a dividend of $2 per share, and this dividend is expected to grow at 15% percent annual rate for many years to come. The corporation has found an index of systematic risk of 1.60. Short-term Treasury securities rate is 10% and the expected return on the market portfolio is 14%. What will happen to the intrinsic value per share? If the stock is currently selling for $187, is this stock overvalued or undervalued and why? (25p) NOTE: PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS. 3. You buy the 6 percent coupon bond today and the price of the bond is $1.012. Par value of the bond is $1.000. The maturity of the bond is 3 years. a) According to the information given above, what will be the bond's yield to maturity? (10p) b) If the bond has currently 3 years left to maturity and suppose that by the end of the year, interest rates have changed and the bond's yield to maturity is now only 4%. What will be the bond's rate of return? (20p) NOTE: PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS. 4. According to the information given below, compute the correlation coefficient and the covariance coefficient between stock A and stock B. (25p) Standard deviation of the portfolio (stock A and stock B) : 0.37 Standard deviation of the stock A : 0.38 Standard deviation of the stock B : 0.43 Weight for stock A : 0.60 Weight for stock B : 0.40 NOTE: PLEASE SHOW HOW YOU COMPUTE EACH OF THE ITEMS

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