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The owner of Tasty Cookies needs to decide whether to lease a small, medium, or big new retail outlet. She determined that monthly profits will vary with demand for her cookies as follows:
A portfolio manager has been asked to create & manage a portfolio with a capital appreciation objective. The manager is subject to the following guidelines presented in the investment po
The following table lists possible rates of return on Compton Technology's stock & debt and on the market portfolio. The probability of each state is also listed.
The covariance of Mercantile Bank Corporation's return with the market's return is 0.038711. The market variance is 0.038588.The expected returns on Mercantile and the market are 0.016333 & 0.0196
A stock that currently trades for 40 dollar per share is expected to pay a yearend dividend of 2 dollar per share. The dividend is expected to grow at a constant rate over time.
Compute the Security Market Line [SML] equation for each stock nad what does the SML tell you about your portfolio of stocks? How can the SML assist in forecasting the expected return on your st
Upload monthly data for the last five year for a stock or ETF you like. The period should include exactly five years of data, say, Jan 1, 2003 - Dec 31, 2007.
Apply solver to calculate the tangency portfolio in M.S. Excel. Print and submit two Excel spreadsheets: one with the starting values for portfolio weights, another with the optimal portfolio weights.
Collect 10 years of monthly returns for four stocks. Sample of ten years of monthly data should be a pretty reasonable estimate of expected returns, variances, and covariance.
Tom Skinner has 45,000 dollar invested in a stock with a beta of 0.8 and another $55,000 invested in a stock with a beta of 1.4. These are the only investments in portfolio.
Assume that securities X and Y are perfectly negatively correlated, with expected returns 8 percent and 12 percent and standard deviations 15% and 25%, respectively.
Stock A has a 10 percent expected return, a beta coefficient of 0.9, and a 35 percent standard deviation of expected returns. Stock B has a 12.5% expected return, a beta coefficient of 1.2, & a 25
Think about a world where there are no risk free assets, & just these 3 risky assets. Assume short sales are permitted. Answer for the weights and variance of the global minimum variance portfolio
Your Uncle has come back to you & agreed that the stock you have singled out as a reasonable bet. What he has done as a result is transfer all of his 600,000 dollar of share portfolio worth equall
Explain what the portfolio variance computations are meant to tell you as if you were asked to describe the concept to someone with a very limited mathematical or finance background.
Apply the currency exposures & exchange rates given above and the following variance-covariance matrix, calculate risk of a USD denominated portfolio.
Stock 1st has a beta = 0.8, while Stock B has a beta = 1.6. Which of the following statements is most correct?
The risk-free rate is 6% and the portfolio's required rate of return is 12.5%. The manager would like to sell all of her holdings of Stock one & use the proceeds to buy more shares of Stock four.
Your portfolio consists of $100,000 invested in a stock which has a beta = 0.8, $150,000 invested in a stock which has a beta = 1.2, & $50,000 invested in a stock which has a beta = 1.8.
An investor, who thinks the economy is slowing down, wishes to decrease the risk of her portfolio. She currently owns five securities, each with a market value of 4,000 dollar.
Derive the pricing formula for the expected excess return of a risky stock and the riskfree stock in the traditional consumption-CAPM assuming that the level of habit Ht depends on the time t-1 agen