1. If you own 350 shares of Xerox at $18.84, 450 shares of Qwest all $9.35, and 250 shares of Liz Claiborne at $46.23, what are the portfolio weights of each stock ? (Round your answers to 3 decimal places.)
Portfolio weights
Xerox
Qwest
Liz Claiborne
2. The past five monthly returns for Kohls are 3.94 percent. 4.62 percent, -2.08 percent, 9.45 percent, and -2.96 percent. What is the average monthly return? (Round your answer to 3 decimal places.)
3. If you own 500 shares of Alaska Air at $59.68, 550 shares of Best Buy at $68.12, and 300 shares of Ford Motor at $9.51, what are the portfolio weights of each stock? (Round your answers to 3 decimal pfaces.)
Portfolio weights
Alaska Air
Best Buy
Ford Motor
4. The past five monthly returns for PG&E are -3.19 percent, 3.93 percent. 3.79 percent. 6.50 percent. and 3.60 percent. What is the average monthly returns? (Round your answers to 3 decimal pfaces.)
5. The past five monthly returns for PG&E are -3.55 percent, 4.83 percent. 4.15 percent. 7.04 percent. and 3.96 percent. Compute the standard deviation of PG&Es monthly returns (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Standard deviation ____
6.
Table Average Returns for Bonds
|
|
|
Low-risk bonds |
|
1950 to 1959
|
Average
|
2.0%
|
|
1960 to 1969
|
Average
|
4.7
|
|
1970 to 1979
|
Average
|
6.6
|
|
1930 to 1989
|
Average
|
8.2
|
|
1990 to 1999
|
Average
|
4.9
|
|
2000 to 2009
|
Average
|
2.3
|
Table Annual Standard Deviation for T-Bills
|
|
Low-risk bonds |
|
1950 to 1959
|
0.7%
|
|
1960 to 1969
|
1.9
|
|
1970 to 1979
|
2.4
|
|
1930 to 1989
|
2.8
|
|
1990 to 1999
|
1.1
|
|
2000 to 2009
|
1.8
|
Calculate the coefficient of variation of the risk-return relationship (Use the above Tables) during each decade since 1950. (Round your answers to 2 decimal places.)
Decade CoV
1950s
1960s
1970s
1980s
1990s
2000s
7. Following are three economic states, their likelihoods: and the potential returns:
|
Economic State
|
Probability
|
Return |
|
Fast growth
|
0.25
|
22%
|
|
Slow growth
|
0.45
|
6
|
|
Recession
|
0.3
|
-26 |
Determine the standard deviation of the expected return .(Round your answer to 2 decimal places.)
Standard deviation____
8. You own $25,334 of Human Genome stock that has an assumed beta of 3.88. You also own $15,292 of Frozen Food Express (assumed beta = 2.76) and $7,170 of Molecular Devices (assumed beta = 0.76)
What is the beta of your portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Portfolio beta
9. You own $19,722 of Olympic Steel stock that has a beta of 2.71. You also own $17,127 of Rent-a-Center (beta = 1.77) and $15,051 of Lincoln Educational (beta = 0.81).
What is the beta of your portfolio? (Do not round intermediate calculation and round your answer to 2 decimal places.)
10. A manager Belives his firm will earn a 23.80 percent return next year. His firm has abeta of 1.69, the expected return on the market is 16.30 percent and the risk free rate is 6.30 percent.
Compute the return the firm should earn given its level of risk.
Determine whether the manager is saying the firm is undervalued or overvalued.