The market portfolio is defined as A portfolio of all the stocks traded on the e
ID: 2647919 • Letter: T
Question
The market portfolio is defined as A portfolio of all the stocks traded on the exchange A portfolio made up of stocks and bonds from companies o inter A balance blend of stocks from the S&P; 500 A portfolio of all the assets in the economy A firm's inventory period is 80 days and accounts receivable period is 38 days. If a firm sets the cash conversion cycle to be a maximum of 63 days, what is the longest the accounts payable period can be? 21 days 25 days 55 days 105 days Sustainable growth is the rate at which the firm can grow without issuing shares or changing its debt ratio. by not paying out any earnings, maintaining the same dividend. is required to attract shareholders. A Company has a beta of 0.47. If the interest rate on Treasury bills is 4% and the expected return on the market portfolio is 14%, what is the expected rate of return for the Company? 14.0% 8.7% 8.3% 10% If in 2013, the market as a whole was up 12%, market risk premium is 9.5%, what is the risk free return? 8.0% 2.5% 4.0% 1.5% See figure, Which of the arrows represent retained earning? 1 3 4a 4b See figure. Which of the arrows represents cash raised by selling financial assets? 1 2 3 4a A stock is selling today for $72 per share. At the end of the year, it sells for $80 and gave a dividend of $3 52. What Is the rate of return for this stock? 11.1% 12.2% 160% 183%Explanation / Answer
22. Option c, the matket portfolio is the a balanced blend of stocks from S&P 500, these are the stocks which helps in minimizing the risk of the portfolio and still give adequate returns
23. Cash conversion cycle = Inventory period + receivable period - payable period
63 = 80 + 38 - PP
Payable period = 80 + 38 - 63 = 55, ooptionc
24, The sustainable growth rate (SGR) of a firm is the maximum rate of growth in sales that can be achieved, given the firm's profitability, asset utilization, and desired dividend and debt. Thus, option c.
25. Rate = Risk free rate + beta * market premium
= 4% + 0.47 * (14%-4%)
= 8.70%, option b
26. Risk free return = market - risk premium
= 12% - 9.5%
= 2.5%
27. Retained earnings is represented by by arrow 3
28 Selling of financial assets is presented by 4a
29. Return = (80-72)+3.52 / 72
= 16%, option c
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