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You have invested your savings in three stocks (one-third in each). The returns on the three stocks are positively correlated, but they are not perfectly

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You have invested your savings in three stocks (one-third in each). The returns on the three stocks are positively correlated, but they are not perfectly correlated. (That is, each of the correlation coefficients is between 0 and 1.) Stock Expeded Return Standard Deviation Beta 9.00% 08 Y 10.75 15 Z 12.50 15 x 15% 1.6 The Risk-free rate is 5.5% and the market is in equilibrium. Required: What is the beta of your fund? What is the required rate of return of your portfolio? If you change your investment weightage with a total of 50% in X, and 25% each in Yand Z. How will it effect the portfolio's beta? A company issued some bonds on January 1, 2000. The bonds were sold at par ($1,000), had a 12% coupon, and matured in 30 years. Coupon payments are made semiannually (on June 30 and December 31). a. What was the YTM on the date the bonds were issued? b. What was the price of the bonds on January 1, 2005 (5 years later), assuming that interest rates had fallen to 10%? c. Find the current yield, capital gains yield, and total yield on January 1, 2005, given the price as determined in part b. d. 6.5 years before maturity, The Company's bonds sold for $917,5. What are the YTM, the current yield, and the capital gains yield for that date? A company has been growing at a rate of 25% per year in recent years. This same supernormal growth rate is expected to last for another 2 years and after that it is expected to grow at a constant rate of 10%. The company paid the most recent dividend of $2.00 per share. The required rate of return is 10% Required: a) What is the company's stock worth today? What is its expected dividend yield and its capital gains yield at this time? b) Now assume that the period of supernormal growth is to last another 5 years rather than 2 years. How would this affect its price, dividend yield, and capital gains yield? c) What will the company's dividend yield and capital gains yield be once its period of supernormal growth ends (Answer in words only

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