Homework Answers
Hi
The Treynor Ratio is measurement of return adjusted for risk based on systematic level of risk.
It can be calculated with the formula-
Here, for calculating the Treynor Ratio for Walsh Retirement Portfolio B =
With formulae-
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Clear my choice You are provided the following information related to Walsh Corp. and its two...
(The following information applies to Questions 3 and 4) You observe the following information in a market where the CAPM holds: beta Expected return Annual standard deviation Stock A 1.5 15.0% 0.25 Stock B 1.2 13.2% 0.30 The correlation co
(The following information applies to Questions 3 and 4)You observe the following information in a market where the CAPM holds:betaExpected returnAnnual standard deviationStock A1.515.0%0.25Stock B1.213.2%0.30The correlation coefficient between stock A and the market is 60%. Question 3:Compute the expected return on the market portfolio.Question 4:What is the expected return of a portfolio that is split (perhaps unevenly) between the risk-free asset and the market, if this portfolio has a standard deviation of 0.07?
You are holding two stocks: Stock A and Stock B. Assume the following information: Realized return:...
You are holding two stocks: Stock A and Stock B. Assume the following information: Realized return: RA = 0.20, RB = 0.10 Standard deviation: SD(RA) = 0.30, SD(RB) = 0.20 BetaA = 0.87, BetaB = 1.46 rf = 0.03; the expected return on the market portfolio is 12% a. Which stock has a higher level of total risk? Which stock has a higher level of systematic risk? Explain your answer. b. What is the risk premium for Stock A and...
1. You are planning to create a portfolio from Lockheed Martin Corp. and Intel Corp., but...
1. You are planning to create a portfolio from Lockheed Martin Corp. and Intel Corp., but first need to determine the required (expected) return for each stock. After completing a bit of research you determine that the 10 Year U.S. Treasury yield is 3% and the expected return on the S&P 500 is 9%. You calculated the betas and found a beta for Lockheed of .8 and 1.3 for Intel. Calculate the required/expected returns for Lockheed and Intel using the...
please do number 6 and 7 i have no idea how to do them! 0.2 13%...
please do number 6 and 7 i have no idea how to do them!
0.2 13% 0.1 15% a. What is the fund's beta? b. What is the market risk premium? c. What is the fund's required rate of return? The fund is considering an additional $50 million investment in a new stock with a beta of 2.0. What is the expected rate of return on this new stock? port. Bela 6. Pacific Desert Corp is considering a large investment...
Please show all work. Thanks! An optimal risky portfolio has been developed with investments in stocks...
Please show all work. Thanks!
An optimal risky portfolio has been developed with investments in stocks and bonds This optimal portfolio has 24% invested in bonds and the remainder invested in stocks The optimal portfolio mean return is 12.05% and its standard deviation is 18.45% The t-bill rate is 4.75%; what is the mean of the complete portfolio if 33% is invested in the optimal portfolio and theremainder is invested in T-bills? a What is the resulting allocation to stocks...
MULTIPLE CHOICE: 1. What is the long-run objective of financial management? A. Maximize earnings per share B. Maximize...
MULTIPLE CHOICE: 1. What is the long-run objective of financial management? A. Maximize earnings per share B. Maximize the value of the firm's common stock C. Maximize return on investment D. Maximize market share 2. Which of the following statement (in general) is correct? A. A low receivables turnover is desirable B. The lower the total debt-to-equity ratio, the lower the financial risk for a firm C. An increase in net profit margin with no change in sales or assets means a weaker ROI...
You have been provided the following data on the securities of three firms, the market portfolio,...
You have been provided the following data on the securities of three firms, the market portfolio, and the risk-free asset: a. Fill in the missing values in the table. (Leave no cells blank - be certain to enter 0 wherever required. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Security Expected Return Standard Deviation Correlation* Beta Firm A .101 .40 .76 Firm B .149 .59 1.31 Firm C .169 .56 .44 The market...
1. You are working in a financial intermediary and your manager asks you to analyze stocks of two different companies trading on Borsa İstanbul. The first company is called R&H Inc. (RHI) an...
1. You are working in a financial intermediary and your manager asks you to analyze stocks of two different companies trading on Borsa İstanbul. The first company is called R&H Inc. (RHI) and the second company is called M&L Corp. (MLC). Both of these companies are in consumer's goods industry and founded at the beginning of the 20th century. You do not know what the returns on these company stocks will be for the next year but you have some...
Given the following information for the two stocks: Stock Expected Return Standard Deviation Investment Beta 16%...
Given the following information for the two stocks: Stock Expected Return Standard Deviation Investment Beta 16% 15% 300 10% $30,000 $20,000 0.8 You construct a portfolio composing of stocks A and B according to the above information. Assume that the risk free rate is 6% and the market risk premium (MRP) is 9%. Use the CAPM analysis to numerically determine whether this 2- stock portfolio is fairly priced? What is your investment recommendation on this portfolio? Why? ?E(Re) = 15.6%...
C. You are analyzing the following stocks by using beta. a. What impact would a 10%...
C. You are analyzing the following stocks by using beta. a. What impact would a 10% increase in the overall market return be expected to have on each asset? b. What impact would a 10 % decrease in the overall market return be expected to have on each asset? c. If you believe that the market return will increase in the near term, which asset would you prefer and why? d. If you believe that the market return will decrease...
1. You are planning to create a portfolio from Lockheed Martin Corp. and Intel Corp., but first need to determine the required (expected) return for each stock. After completing a bit of research you determine that the 10 Year U.S. Treasury yield is 3% and the expected return on the S&P 500 is 9%. You calculated the betas and found a beta for Lockheed of .8 and 1.3 for Intel. Calculate the required/expected returns for Lockheed and Intel using the...
please do number 6 and 7 i have no idea how to do them!
0.2 13% 0.1 15% a. What is the fund's beta? b. What is the market risk premium? c. What is the fund's required rate of return? The fund is considering an additional $50 million investment in a new stock with a beta of 2.0. What is the expected rate of return on this new stock? port. Bela 6. Pacific Desert Corp is considering a large investment...
Please show all work. Thanks!
An optimal risky portfolio has been developed with investments in stocks and bonds This optimal portfolio has 24% invested in bonds and the remainder invested in stocks The optimal portfolio mean return is 12.05% and its standard deviation is 18.45% The t-bill rate is 4.75%; what is the mean of the complete portfolio if 33% is invested in the optimal portfolio and theremainder is invested in T-bills? a What is the resulting allocation to stocks...
1. You are working in a financial intermediary and your manager asks you to analyze stocks of two different companies trading on Borsa İstanbul. The first company is called R&H Inc. (RHI) and the second company is called M&L Corp. (MLC). Both of these companies are in consumer's goods industry and founded at the beginning of the 20th century. You do not know what the returns on these company stocks will be for the next year but you have some...
Given the following information for the two stocks: Stock Expected Return Standard Deviation Investment Beta 16% 15% 300 10% $30,000 $20,000 0.8 You construct a portfolio composing of stocks A and B according to the above information. Assume that the risk free rate is 6% and the market risk premium (MRP) is 9%. Use the CAPM analysis to numerically determine whether this 2- stock portfolio is fairly priced? What is your investment recommendation on this portfolio? Why? ?E(Re) = 15.6%...
C. You are analyzing the following stocks by using beta. a. What impact would a 10% increase in the overall market return be expected to have on each asset? b. What impact would a 10 % decrease in the overall market return be expected to have on each asset? c. If you believe that the market return will increase in the near term, which asset would you prefer and why? d. If you believe that the market return will decrease...
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