QUESTION 1

D1:
Discount rate (r):
Growth (g):

Price:

QUESTION 2

STOCK A

Expec. Return (mean):

Standard Deviation:
CV:

The investors should prefer to invest in Stock B because it has a lower standard of deviation and a l

QUESTION 3

dividend
required return
growth rate

Expected dividend in one year

value:

QUESTION 4

A-
Asset 1
Asset 2

B-
Asset 1

Standard deviation:
Sum:
CV:

I would choose Asset 1 since it has a lower Cv which means a lower risk to return ratio

QUESTION 5
Par value
Coupon rate
Pmt
maturity (nper)
Dicount rate
Pv
 5
16%
6%

50 it should be sold for $50

STOCK B

15% Expec. Return (mean):

10% Standard Deviation:
0.6666666667 CV:

2
12%
5%

2.1
30.00

Probability Return Expected return

0.3 0.1 0.03
0.4 0.15 0.06
0.3 0.2 0.06
 Sum:
Range: 0.1

probability Return
0.3 0.1 0.15
0.4 0.15 0.15
0.3 0.2 0.15

Probability Return Expected return

0.3 0.4 0.12
0.4 0.2 0.08
0.3 0.4 0.12
Sum:
Range: 0.2

probability Return
0.3 0.4 0.32
0.4 0.2 0.32
0.3 0.4 0.32

Asset 2

0.038729833462 Standard deviation:

0.15 Sum:
0.258198889747 CV:

Annually Semi- annually

 1000 1000
10% 5%
100 50
30 60
9% 0.045
1102.7365404 1103.19011019103
 15%
5%
0.33333333333
 0.15

R-Expected return (R-Expected return)^2 Variance

-0.05 0.0025 0.00075
0 0 0
0.05 0.0025 0.00075
Sum: 0.0015
Standard deviation: 0.0387298335

0.32

R-Expected return (R-Expected return)^2 Variance

0.08 0.0064 0.00192
-0.12 0.0144 0.00576
0.08 0.0064 0.00192
Sum: 0.0096
Standard deviation: 0.0979795897

0.09797958971133
0.32
0.3061862178479