I need a quote for the completion of the assigment attached, and whether you can have it ready by 7:00 am tomorrow?

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I need a quote for the completion of the assigment attached, and whether you can have it ready by 7:00 am tomorrow?
Answered Same DayMar 04, 2021

Answer To: I need a quote for the completion of the assigment attached, and whether you can have it ready by...

Sandeep answered on Mar 04 2021
135 Votes
1. Short Question & Examples
a. It is that rate of return at which the company evaluate the capital proposals. Many often it is also called the discount rate at which cash flow from any project is discounted and the NPV becomes zero.
It is one of the best techniques for capital budgeting, ideally a project is acceptable when the IRR of
the project is greater the weighted average cost of capita (WACC) of the company.
b. Capital market line (CML) is a graph that reflects the expected return of a portfolio consisting of all possible proportions between the market portfolio and a risk-free asset. The market portfolio is completely diversified, carries only systematic risk, and its expected return is equal to the expected market return as a whole.
This line indicates the rate of return required to compensate at a given level of risk.
 In general terms, the expected return of a particular portfolio (E(RC)) can be calculated as follows;
E(Rc) = y × E(RM) + (1 – y) × RF
c. There are two types of risk in portfolio management one is systematic and other is unsystematic which are also called non-diversifiable and diversifiable risk respectively.
Diversifiable risk is that portion of total risk which results from known and controllable factors. On the other side non-diversifiable risk which results from external and uncontrollable factors.
Examples;
Diversifiable risk
· Business risk like revenue, profitability, product mix etc
· Financial Risk like capital structure of the company, debt/equity etc
· Default Risk
Non-diversifiable risk
· Market Risk like change in demand & supply
· Interest rate Risk
· Purchasing Power risk
d. The non-diversifiable risk of an individual security is measured in terms of its sensitivity to market movements which is referred to as security’s beta. Beta coefficient is a measure of the volatility of stock price in relation to movement in stock index of the market.
Example
An investor can avoid or eliminate the unsystematic risk by investing funds in wide range of securities and by having well diversified portfolio.
If stock A’s beta is 2.00 then 1 point change in market index can change the stock price by 2.
2. Fixed Income Analysis
a) A coupon bearing bond may be priced with the following formula ;
P =
Where:
C= Periodic coupon payment
y= yield to maturity
F= face value
t = time
T = number of periods until the bonds maturity date
Now,
In our example ;
C = 100 * 16%/2 = USD 8 Half yearly
y = 10%/2 = 5%
F = USD 1000
Solution would be;
    Period
    Coupon Amount (A)
    1/(1+y)t
(B)
    A *B
    1
    8
     0.952
     7.62
    2
    8
     0.907
     7.26
    3
    8
     0.864
     6.91
    4
    8
     0.823
     6.58
    5
    8
     0.784
     6.27
    6
    8
     0.746
     5.97
    7
    8
     0.711
     5.69
    8
    8
     0.677
     5.41
    9
    8
     0.645
     5.16
    10
    8
     0.614
     4.91
    11
    8
     0.585
     4.68
    12
    8
     0.557
     4.45
    13
    8
     0.530
     4.24
    14
    8
     0.505
     4.04
    15
    8
     0.481
     3.85
    16
    8
     0.458
     3.66...
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