MID-ATLANTICSPECIALTY,INC.FinancialRisk1. Compare the stand-alone risk/return of each of the five investment alternatives listed in Exhibit13.1.2. MSI is considering two investment strategies:-50percentinProjectAand50percentinProjectB(PortfolioA/B) or-50percentinProjectAand50percentintheS&P500Fund(PortfolioA/S&P). Comparethe riskofthetwoportfolios.Whydoestheriskdiffer?3.a.b.Comparethe corporateriskofProjectsAandB.(Hint:UsetheexpectedreturnsinExhibit13.1to createagraphwithcorporatecharacteristiclinesforProjectsAand B.Regressionlinescanbe createdusingthe=INTERCEPTand=SLOPEfunctionsinExcel.TheXY(Scatter)chartinExcelis recommended.)Whatwouldhappento theoverallriskofMSIifitinvestsinProjectA?ProjectB?4.a.b. c.Comparethe marketriskofa1-yearT-Bill,ProjectA,ProjectB,andequityinMSI.(Hint:UsethehistoricalreturnsinExhibit13.2tocreateagraphwith marketcharacteristiclinesfora1-yearT-Bill, ProjectA,ProjectB,andequityinMSI.)Whatwouldhappento theoverallriskofawell-diversifiedportfoliowithaninvestmentina1-YearT-Bill?ProjectA?ProjectB?EquityinMSI?Whatdoesthedistancebetweenthemarketcharacteristicslineand theexpected returnofan investmentindicate?5.a.b.Ifyouwereanindividualinvestorwithawell-diversifiedportfolio,whichinvestment(s)inExhibit13.1 wouldyoubuy?Why?(Inreality,MSIisanot-for-profitcorporation,soitwouldbeimpossible tobuy anequityinterestin thefirm.Forthisquestion,assumethatMSIisan investor-ownedcompany.) (Hint:constructaSecurityMarketLinegraphandplottheexpected returnofeachinvestmentonthegraph.)WhatdoesthedistancebetweentheSMLandtheexpectedreturnofaninvestmentindicate?6.a. b.c.Isthereturnontheone-yearT-billriskfree?SupposeMSIwantstoconstructaportfolioofstocksthathasanexpectedreturnequaltotherisk- freerate.Issuchaportfoliopossible?Issuchaportfoliolikely?Supposethatyouchoosetoholdasinglestockinvestmentinisolation.Would youbecompensated foralloftheriskthatyouassume?Explain.7. Inyouropinion,whatarethreekeylearningpointsfromthiscase?
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Sarbanes-Oxley was passed in response to which of the following?The .com implosionThe savings and loan bailoutThe implosion of WorldCom and EnronNone of the aboveQuestion2 of 50Which of the following describes the internal control component “monitoring of controls”?Internal auditors monitor company controls to safeguard assets, and external auditors evaluate the controls to ensure that the accounting […]
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Assessment Task – Tutorial Questions Unit Code: HC3152-T2-2020 Unit Name: e-Business Applications Assignment: Tutorial Questions Assignment [1 Attempt Only] Due: 11:59pm 12th October 2020 Weighting: 50% Purpose: This assignment is designed to assess your level of knowledge of the key topics covered in this unit Unit Learning Outcomes Assessed: On completion of this unit students […]
Controllership BUS 650-(01&02)Final Project â Part 1Due before class final (Part2)Please download the Excel file labeled âFinal Projectâ and follow the steps below.1) Notice that some of the Balance Sheet and Income Statement lines and are not on the first tab of the excel sheet. The second tab shows the missing lines. Copy and paste […]
P9?9(Statement and Note Disclosure, LCM, and Purchase Commitment) Maddox Specialty Company, a division of Lost World Inc., manufactures three models of gear shift components for bicycles that are sold to bicycle manufacturers, retailers, and catalog outlets. Since beginning operations in 1988, Maddox has used normal absorption costing and has assumed a first-in, first-out cost flow […]
An internet service provider (ISP) provides internet connections to 100,000 customers. 10,000 of the customers have high-speed connections and 90,000 of the customers have low-speed connections. The ISP wants to know whether, on the average, customers who have high-speed connections use email more frequently than customers who have low-speed connections. To find out, the ISP […]
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