• 2022-06-17
    Suppose that each of two investments has a 4% chance of a loss of $10 million, a 2% chance of a loss of $1 million, and a 94% chance of a profit of $1 million. They are independent of each other. What is the VaR for one of the investments when the confidence level is 95%?( )
    A: $1 million
    B: $10 million
    C: $8.2 million
  • A

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    • 0

      Year 1 2 3 4Free Cash Flow $12 million $18 million $22 million $26 millionConundrum Mining is expected to generate the above free cash flows over the next four years, after which they are expected to grow at a rate of 6% per year. If the weighted average cost of capital is 12% and Conundrum has cash of $80 million, debt of $60 million, and 30 million shares outstanding, what is Conundrum's expected terminal enterprise value at year 4? A: $413.4 million B: $459.3 million C: $505.3 million D: $528.2 million

    • 1

      If the reserve ratio is 10% and the Fed sells 10 million worth of bonds to a commercial bank, its deposits A: Increase by 10 million B: Decrease by 10 million C: Increase by 100 million D: Decrease by 100 million

    • 2

      The gain from a<br/>project is equally likely to have any value between -$0.15 million<br/>and +$0.85 million. What is the 99% expected shortfall? ( ) A: $0.145 million B: $0.14 million C: $0.13 million D: $0.10 million

    • 3

      The population in the Paris area is around () A: two million B: eight million C: sixteen million D: eighteen million

    • 4

      Larry the Cucumber has been offered $14 million to star in the lead role of the next three Larry Boy adventure movies. If Larry takes this offer, he will have to forgo acting in other Veggie movies that would pay him $5 million at the end of each of the next three years. Assume Larry's personal cost of capital is 10% per year. The NPV of Larry's three movie Larry Boy offer is closest to: A: 3.5 million B: -1.6 million C: 1.6 million D: -1.0 million