Description
masters degree in accounting
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The first question:
You have the following data about a business organization:
)1(Number of units sold [500,000 units] – (2) Unit selling price [5] pounds – (3) Variable
cost per unit [2.5] pounds – (4) Operating fixed costs [600,000 pounds – (5) Debt ratio |
Origins [4] – (6) modified
Interest on debts [16] – (7) Total assets [2,000,000] pounds – (8) Tax rate on commercial
and industrial profits.]%20[
Required:
a) Estimating the rate of return on equity, the rate of return on investment, and the rate of
return on assets, with a comparison between these rates.
b) Was the debt used to benefit the owners or not? And why?
c) Find the degree of operating, financing, and total leverage, and explain the significance
of each.
second question:
You have the following information about shares A and B:
– )1(The purchase price of share (A) is (120) pounds, and the expected selling prices for
it, after a year, are (132, 124, 122, 116) pounds with probabilities of (30, 50, 15, 5),
respectively, accompanied by cash distributions of (8, 5, 4, 0) pounds, respectively.
– )2(The expected return for stock (B) is (16%), while the standard deviation of its
returns is.)%10(
Required:
A – Calculate the holding period return for each price, from the expected prices of stock
A.
B – Estimate the expected return and standard deviation for stock A.
C – Determine which stock is better between the two stocks, from the perspective of
return per unit risk.
The third question:
You have the following information about shares A and B:
Arrow A
Arrow B
Yield%
Probability of Verification
Yield%
Probability of Verification
36
18
6
30%
40%
30%
24
18
12
30%
40%
30%
required:
[1] – If you know that there is a portfolio made up of these two stocks at a ratio of (40%)
for stock A, (60%) for stock B. What is the expected rate of return and standard
deviation? For this fact?
[2] – If you know that there is another bag whose expected return is (15%) and whose
standard deviation is (12%), which bag is better from your point of view?
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