I need help please ALTERNATIVES2.FiVLPortfolio UPortfolio VPortfolioWRecession$25$ 47$ 503Inflation$75$ 70$ 805TES OF NATURESTADepression$0$-5$ - 15.2DMUR:Consider nowthat theprobabilities for each demand have beencalculated as 3, 5, and .2, respectively. Findthe expected value (Xbar), the standarddeviation (Sigma), and the Coefficient ofVariation (CoV) for each alternative. Whichportfolio would you recommend on the basisof the three? PRACTICE 2 - DMURA stock market advisory service offers three investmentsportfolios for one of its customers. All portfolios have thesame investment cost. Portfolio U contains speculative stocks,which aim for capital gain through price appreciation. PortfolioV is madeup of stocks of stable companies that pay gooddividends overt the long run. Portfolio W comprises stockswith a moderate potential for growth and a moderate yield ofdividends.The customer has enough money to invest in onlyone of thesethree portfolios for a period of one year. The net return oninvestments will depend on whether the economy during theperiod will be in a stage of inflation, recession, ordepression. The net potential gains or losses (in thousands)are calculated follows:as

The expected value of a portfolio indicates how much return can be expected from investing in the…

ALTERNA TIVES 2. Fi VL Portfolio U Portfolio V Portfolio W Recessi on $25 $47 $50 .3 Inflatio n $75 $ 70 $ 80 5 Depressi on $0 $-5 $ 15 .2 DMUR: Consider now that the probabilities for each demand have been calculated as 3, 5, and .2, respectively. Find the expected value (Xbar), the standard deviation (Sigma), and the Coefficient of Variation (CoV) for each alternative. Which portfolio would you recommend on the basis of the three?

ALTERNA TIVES 2. Fi VL Portfolio U Portfolio V Portfolio W Recessi on $25 $47 $50 .3 Inflatio n $75 $ 70 $ 80 5 Depressi on $0 $-5 $ 15 .2 DMUR: Consider now that the probabilities for each demand have been calculated as 3, 5, and .2, respectively. Find the expected value (Xbar), the standard deviation (Sigma), and the Coefficient of Variation (CoV) for each alternative. Which portfolio would you recommend on the basis of the three?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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QUESTIONS: 1) Assuming that the risk-free rate of return is currently 3,2%, the market risk premium is 6% whereas the beta of HelloFresh SH. stock is 1.8, compute the required rate of return using CAPM. 2) Compute the value of each investment based on your required rate of return and interpret the results comparing with the market values. 3) Which investment would you select? Explain why using appropriate financial jargon (language). 4) Assume HelloFresh SH's CFO Mr. Christian Gaertner expects an earnings upturn resulting increase in growth (rate) of 1%. How does this affect your answers to Question 2 and 3? 5) AACSB Critical Thinking Questions: A) Companies pay rating agencies such as Moody's and S&P to rate their bonds, and the costs can be substantial. However, companies are not required to have their bonds rated in the first place; doing so is strictly voluntary. Why do you think they do it? (Textbook page: 198) B) What are the difficulties in using the PE ratio to value stock?…
Solve soon i will give u 2 like sure Investors are most likely to use what type of valuation across a variety of different securities? a. Discounted Cash Flow Model b. Residual Operating Income Model c. Dividend Discount Model
1. You estimate the Fama-French 3-factor model for the two stocks, A and B, and find the following coefficients. You also estimate risk premiums for each factor. Calculate the cost of equity capital (i.e., expected rate of return) for each company using the 3-factor APT model. The risk-free rate is 4%. Stock Mkt A B Risk premiums 1.1 1.0 5% SMB -1.2 -2.0 HML -1.0 -1.5 3%
Question 1 Fill the parts in the above table that are shaded in yellow. You will notice that there are nineline items. Question 2Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph
3. Forecasting stock value Understanding the returns from investing When buying stock, you can expect to earn money through future current income (from ) and future capital appreciation (from ). Together, your total earnings from a given investment can be expressed in terms of the approximate yield. This value makes it easier for you to compare investment options. Understanding the Approximate Yield Equation The formula for the approximate yield of an investment can look intimidating, but it’s really just a function of three things: (1) average current income, (2) average capital gains, and (3) the average value of the investment. Based on the information in the table, compute each of these values for the two stocks over a 3-year period and enter the values into the bottom half of the table. Stock 1 Stock 2 Expected average annual dividends (2012–2014) $0.95 $2.65 Current stock price $50 $119 Expected future stock price (2014) $62 $149…
The payoff table below indicates the returns (in RM thousands) of investments in stock, bond and fixed deposit under different economic situations. Type of Investment Stock Bond Fixed Deposit Table 1 Economic Situation Good 150 50 45 Stable 60 40 45 Poor -30 36 45 The probabilities of good, stable and poor economy are 0.3, 0.5 and 0.2, respectively. What is the best investment based on the expected monetary value criterion? Draw a decision tree.
Question 1Fill the parts in the above table that are shaded in yellow. You will notice that there are nineline items. Question 2 Using the data generated in the previous question (Question 1)a) Plot the Security Market Line b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML?d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph
PLEASE ANSWER ALL THE QUESTIONS Question 1 Fill the parts in the above table that are shaded in yellow. You will notice that there are nine line items. Question 2 Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what does it show? Identify undervalued/overvalued investments from the graph Question 3 From the information generated in the previous two questions; a) Identify two investment alternatives that can be combined in a portfolio. Assume a 50-50 investment allocation in each investment alternative. b) Compute the expected return of the portfolio thus formed. c) Compute the portfolio’s beta. Is the portfolio aggressive or defensive?
c. An investor wants to implement a returns-based momentum strategy. Using the method in the Study Guide, what money position should be held in each of the four stocks given below if the total long position is to be $1,000? Explain your reasoning. Security Period 1 Period 2 A 30 40 50 70 60 65 10 12 BCD
Problem 3: Evaluating portfolio performance Assume you have two investment opportunities. 1. Corporate Disasters (CD) has expected returns E(RcD) = 4% and standard deviation of returns 9%. 2. Nevada beach front properties (NBF) has expected returns E(RygF) = 10% and standard deviation of returns 18% Risk free rate is R; = 1%. a) Calculate Sharpe ratios of these two portfolios. b) Assume you can invest only in one of those companies (and a risk free rate). Assume your target rate of return is 6%. Calculate portfolios with CD&RF and NBF&RF which would deliver this return. Which portfolio has smaller standard deviation and why? c) Assume you have a portfolio which is not efficient. Assume Corporate Disasters have market beta of ßep = 0.5 and Nevada beach front properties have market beta BNef = 4. Calculate Treynor measures for those securities. Which one should you add to your portfolio to increase the Sharpe ratio.
PART A,B and C are completed. need help in D and E. TIA Unique vs. Market Risk. The figure below shows plots of monthly rates of return on three stocks versus the stock market index. The beta and standard deviation of each stock is given besides its plot. A. Which stock is riskiest to a diversified investor? B. Which stock is riskiest to an undiversified investor who puts all her funds in one of these stocks? C. Consider a portfolio with equal investments in each stock. What would this portfolio’s beta have been? D. Consider a well-diversified portfolio made up of stocks with the same beta as Exxon. What are the beta and standard deviation of this portfolio’s return? The standard deviation of the market portfolio’s return is 20 percent. E. What is the expected rate of return on each stock? Use the capital asset pricing model with a market risk premium of 8 percent. The risk-free rate of interest is 4 percent.
6) An investor holds a portfolio of stocks and is considering investing in the DBB Company. The firm's prospects look neutral, and you estimate the following probability distribution of possible returns: Conditions Recession P Returns on.DBB Returns on DVI 0.12 -33% -12% Below Average 0.15 -18% 7% Average 0.46 12% 11% Above Average 0.15 25% 23% Boom 0.12 37% 25% a) How much is the expected return for DBB? b) How much is the coefficient of variation for DBB? c) Now let's say you want to add another asset, DVI, to your portfolio. You sell 35% of DBB to purchase DVI. How much is your expected return for this portfolio? d) How much is the coefficient of variation for the new portfolio?

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