1. How do we measure the returns on our portfolio? Kraska will answer this question by assuming that a $1,000,000 portfolio in a given year earns $30,000 in dividends and either gains or loses $100,000 in market value.
Show his computations. Be prepared to answer a follow-up question about the value of the portfolio after a 5% grant distribution.
Kraska will also compute Lawrence's EAR on his investment in Google to illustrate a multiyear perspective. Lawrence purchased the Google stock for $200,000 and held it for three years before he died.
2. A-How can we assess the risk of an individual stock? Kraska will first address this question by looking at recent returns on Amazon and on Coca-Cola. Compute the mean and standard deviation for each, and explain their meaning. He has collected the following return data:
A table to accompany the Mini-Case.
B-Kraska will also suggest that it is good to assess risk by looking forward to how we expect stocks to react to a particular set of circumstances or "state of nature."
Use the following set of assumptions for the coming year to compute the expected rate of return and the standard deviation for Amazon, Coca-Cola, and a portfolio with equal dollar amounts invested in Amazon and Coca-Cola (see table at the bottom of the page). SHOW ALL WORK
A table to accompany the Mini-Case.
Need answer to 2 B please