Question
19)Mountain Ski Corp. was set up to take large risks and is willing to take the greatest risk possible. Lakeway Train Co. is more typical of the average corporation and is risk-averse.
ProjectsReturns:
Expected ValueStandard
Deviation A$319,000 $209,000 B 728,000 502,000 C 109,000 100,000 D 222,000 306,000
a-1.Compute the coefficients of variation. (Round your answers to 3 decimal places.)
Coefficient of
Variation Project A Project B Project C Project D
a-2.Which projects should Mountain Ski Corp. choose? Project AProject BProject DProject C
b. Which one of the four projects should Lakeway Train Co. choose based on the same criteria of using the coefficient of variation? Project BProject AProject CProject D
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Question
18) Tim Trepid is highly risk-averse while Mike Macho actually enjoys taking a risk.
InvestmentsReturns:
Expected ValueStandard
Deviation Buy stocks$9,590 $5,740 Buy bonds 7,050 2,900 Buy commodity futures 23,600 29,900 Buy options 20,000 16,500
a-1.Compute the coefficients of variation. (Round your answers to 3 decimal places.)
Coefficient of
Variation Buy stocks Buy bonds Buy commodity futures Buy options
a-2.Which one of the following four investments should Tim choose?
Buy bondsBuy stocksBuy commodity futuresBuy options
b. Which one of the four investments should Mike choose? Buy bondsBuy stocksBuy commodity futuresBuy options
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Question
17)Five investment alternatives have the following returns and standard deviations of returns. AlternativesReturns:
Expected ValueStandard
DeviationA $ 1,900 $ 430 B 1,640 1,170 C 10,500 5,200 D 1,650 660 E 63,900 22,200
Calculate the coefficient of variation and rank the five alternatives from lowest risk to the highest risk by using the coefficient of variation. (Round your answers to 3 decimal places.) AlternativesCoefficient of
VariationRankA(Click to select)AEDCBB(Click to select)AEDCBC(Click to select)AEDCBD(Click to select)AEDCBE(Click to select)AEDCB
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Question
6)Barry’s Steroids Company has $1,000 par value bonds outstanding at 13 percent interest. The bonds will mature in 50 years. If the percent yield to maturity is 11 percent, what percent of the total bond value does the repayment of principal represent? Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places. Assume interest payments are annual.) Principal as a percentage of bond price%
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