Multiple Choice and True/False responses (should be returned using the ANSWER SHEET PROVIDED TO YOU).

For the Base and Downside Cases read the directions carefully and you may either use the spread sheet provided or create your own excel sheet.  For both cases there are 7 required answers, 5 metrics and 2 covenant responses.  Please review the instructions carefully on the methodology to calculate the following:

Ø Annual income yield to equity

Ø Appreciation returns of the annual equity

Ø Total return to equity

Ø  Debt Service Coverage Ratio 

Ø Loan to Value Percentage

You have 3 questions to answer on this case, please do so in a word document.  Do not write the answer free hand/script etc.

For problem 2 you are provided the equation for the Capital Markets line to compute the Expected Return, the degree of Risk Aversity, don’t like risk (highest, lowest, and middle) and whether the investor is a lender, borrower or neither PLOTTED ON THE GRAPH.

For Problem 3 you are provided the equation for the Security Markets line to compute the various metric elements to determine where the specific stocks fall relative to the line (undervalued, overvalued, properly valued).  And they should be PLOTTED ON THE ACCOMPANYING GRAPH.

For Question 4 briefly explain in word document which of the 4 portfolios form the efficient frontier and why, Part A

.  And, also explain your observations on the differences for all the 4 different combinations as described in Part B.