1. `You own a portfolio that has $500 invested in Stock A and $1,000 invested in Stock B. The expected returns on these stocks are 20% and 14% respectively.

The expected return on the portfolio is Question Blank 1 of 1

2. Your company has been offered credit terms on its purchases 4/30, net 90 days. What is the annual cost of trade credit if your company pays after the discount period?

Question Blank 1 of 1 %. (round your answer to the nearest %)

3. Pinnock Ltd's common stock has an expected return of 14.4% and a beta of 1.2. If the expected risk-free return is 8%, what is the expected return for the market

Pinnock Ltd's common stock has an expected return of 14.4% and a beta of 1.2. If the expected risk-free return is 8%, what is the expected return for the market

9.6%

13.3%

7.7%

12.0%

4. A stock with a beta greater than 1.0 has returns that are

Question Blank 1 of 2

volatile than the market and is considered a(n)

Question Blank 2 of 2

stock..

5. Rae Ltd. has an estimated monthly demand for cash of $800,000, and this is expected to be constant for the year. The fixed cost per transaction is $250 and interest rate on short-term securities is 12% per annum.

6. Compute the optimal cash balance and number of transactions, respectively.

Rae Ltd. has an estimated monthly demand for cash of $800,000, and this is expected to be constant for the year. The fixed cost per transaction is $250 and interest rate on short-term securities is 12% per annum.

Compute the optimal cash balance and number of transactions, respectively.

$200,000; 48 transactions

$20,000; 4.8 transactions

$20,000,000; 4,800 transactions

$2,000,000; 480 transactions

7. The following probability distributions of returns for two stocks have been estimated:

Probability	Returns - Stock A	Returns - Stock B
0.3	12%	5%
0.4	8%	4%
0.3	6%	3%

What is the coefficient of variation for the stock that is less risky?

The following probability distributions of returns for two stocks have been estimated:

Probability	Returns - Stock A	Returns - Stock B
0.3	12%	5%
0.4	8%	4%
0.3	6%	3%

What is the coefficient of variation for the stock that is less risky?

3.62

0.66

0.28

0.19

Instructions

Use the information below to answer the questions attached

Miller-Orr

HF Inc maintains a minimum cash balance of $25,000. The standard deviation of its daily net cash flows is $2,000, the effective annual rate on marketable securities to be 4.5% per year and the trading cost per sale or purchase of marketable securities is $180.

Item at position 16

16

2 points

Item 16 is unpinned. Click to pin.

Item at position 16

The optimal cash return point is Question Blank 1 of 1. (round your answer to 2 dp)

Item at position 17

17

2 points

Item 17 is unpinned. Click to pin.

Item at position 17

HF Inc's optimal upper cash limit is Question Blank 1 of 1. (round your answer to 2 dp)