Homework Answers
Answer 2 a:
CV stands for Coefficient of Variation. It is used to compare relative risk, and is equal to the ratio between the standard deviation and the mean. On relative basis, lower CV indicates less risk. In the given case, Stock X seems to be less riskier based on CV values.
Answer 2 b:
RTRR stands for Re-rated Total Rate of Return. Calculation of RTRR takes into account and assumes that valuation multiples, growth rates, etc. tend to revert to their long-term historical averages over time. The higher the RTRR percentage, the better. In the given case, Stock X has higher RTRR percentage and seems to be better investment alternative.
Answer 2 c:
Based on the interpretation of CV and RTRR values in answers 2 a, and 2 b respectively, it is recommended to invest in Stock X.
Add Answer to:
2. You are trying to decide to invest in one of two different stocks: X or Y. The indicators for each stock are pro...
You are trying to develop a strategy for investing in two different stocks. The anticipated annual...
You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic conditions has the probability distribution shown to the right. Complete parts (a) through (c) below. probability economic condition stock x stock y 0.1 recession -120 -30 0.3 slow growth 40 30 0.4 moderate growth 150 110 0.2 fast growth 190 160 a. compute the expected stock return for stock x and for...
7. Mr. Thaggert is trying to decide whether to invest in stocks or in CD's(Certificate of deposit). If he invests in stocks and the interest rates go up, his stock investments go down by 2%, but...
7. Mr. Thaggert is trying to decide whether to invest in stocks or in CD's(Certificate of deposit). If he invests in stocks and the interest rates go up, his stock investments go down by 2%, but he ģains î% in his CD's. On the other hand if the interest rates go down, he gains 3% in his stock investments, but he loses 1% in his CD's. a. Write a payoff matrix for Mr. Thaggert. b. If you were his investment...
You are trying to develop a strategy for investing in two different stocks. The anticipated annual...
You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic conditions has the probability distribution shown to the right. Complete parts (a) through (d). Returns Probability Economic Condition Stock X (in $’s) Stock Y (in $’s) 0.4 Recession - 55 -80 0.1 Slow growth 30 50 0.2 Moderate growth 110 130 0.3 Fast growth 160 200 Note: Include Excel...
1. You are trying to develop a strategy for investing in two different stocks. The anticipated...
1. You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic conditions has the following probability distribution: Р (Y) Probability of Annual Р (Х) Economic Stock X Stock Y Condition Returns Returns Return (X) (y) (P) Recession 0.1 -50 -100 Slow Growth 0.3 20 50 Moderate 0.4 100 130 Growth Fast Growth 0.2 200 150 xP(x) a. What is the expected return...
7. Mr. Thaggert is trying to decide whether to invest in stocks or in CD's(Certificate of deposit). If he invests in stocks and the interest rates go up, his stock investments go down by 2%, but h...
7. Mr. Thaggert is trying to decide whether to invest in stocks or in CD's(Certificate of deposit). If he invests in stocks and the interest rates go up, his stock investments go down by 2%, but he gains 1% in his CD's. On the other hand if the interest rates go down, he gains 3% in his stock investments, but he loses 1% in his CD's. Write a payoff matrix for Mr. Thaggert. If you were his investment advisor, what...
QUESTION 2 (27 MARKS) Currently you are considering two stocks before you decide to invest. Since...
QUESTION 2 (27 MARKS) Currently you are considering two stocks before you decide to invest. Since the market will volatile after the 14th General Election, you have the follwing data to analyse: Probability of State of economy Rate of return Stock Genuine Rate of return Stock Lobaloba (56) occurrence 10 0.1 Boom 0.6 Normal Recession Required: b. Calculate the expected return and standard deviation for each of two stocks. (10 marks) Suppose an investor has 25,000 shares and invests 15.000...
Summary statistics for returns on two stocks X and Y are listed below. Mean 5.81% Stock...
Summary statistics for returns on two stocks X and Y are listed below. Mean 5.81% Stock X Stock Y Variance 0.004000. 0.007000 3.11% The covariance of returns on stocks X and Y is 0.002100. Consider a portfolio of 10% stock X and 90% stock Y. What is the variance of portfolio returns? Please round your answer to six decimal places. Note that the correct answer will be evaluated based on the full-precision result you would obtain using Excel. igation tips
Summary statistics for returns on two stocks X and Y are listed below. Mean Variance Stock...
Summary statistics for returns on two stocks X and Y are listed below. Mean Variance Stock X 5.81% 0.004000 Stock Y 3.11% 0.007000 The covariance of returns on stocks X and Y is 0.002100. Consider a portfolio of 10% stock X and 90% stock Y. What is the variance of portfolio returns? Please round your answer to six decimal places. Note that the correct answer will be evaluated based on the full-precision result you would obtain using Excel.
Summary statistics for returns on two stocks X and Y are listed below. Mean Variance Stock...
Summary statistics for returns on two stocks X and Y are listed below. Mean Variance Stock X 4.88% 0.005000 Stock Y 3.71% 0.007000 The covariance of returns on stocks X and Y is 0.002700. Consider a portfolio of 60% stock X and 40% stock Y. What is the standard deviation of portfolio returns? Please specify your answer in decimal terms and round your answer to the nearest thousandth (e.g., enter 12.3 percent as 0.123). Note that the correct answer will...
1)An investor is considering investing an equally weighed portfolio of two (2) stocks namely X and...
1)An investor is considering investing an equally weighed portfolio of two (2) stocks namely X and Y. You have been given the following information about these two stocks in terms of risk, return and correlation, as shown below: 2)Based on this calculate a) portfolio return b) portfolio risk c.)Compare portfolio risk with the individual stock risks and identify the benefit of the diversification of the portfolio. Stock X Y E(R) 10% 8% σ 20% 15% Correlation between A and B...
7. Mr. Thaggert is trying to decide whether to invest in stocks or in CD's(Certificate of deposit). If he invests in stocks and the interest rates go up, his stock investments go down by 2%, but he ģains î% in his CD's. On the other hand if the interest rates go down, he gains 3% in his stock investments, but he loses 1% in his CD's. a. Write a payoff matrix for Mr. Thaggert. b. If you were his investment...
1. You are trying to develop a strategy for investing in two different stocks. The anticipated annual return for a $1,000 investment in each stock under four different economic conditions has the following probability distribution: Р (Y) Probability of Annual Р (Х) Economic Stock X Stock Y Condition Returns Returns Return (X) (y) (P) Recession 0.1 -50 -100 Slow Growth 0.3 20 50 Moderate 0.4 100 130 Growth Fast Growth 0.2 200 150 xP(x) a. What is the expected return...
QUESTION 2 (27 MARKS) Currently you are considering two stocks before you decide to invest. Since the market will volatile after the 14th General Election, you have the follwing data to analyse: Probability of State of economy Rate of return Stock Genuine Rate of return Stock Lobaloba (56) occurrence 10 0.1 Boom 0.6 Normal Recession Required: b. Calculate the expected return and standard deviation for each of two stocks. (10 marks) Suppose an investor has 25,000 shares and invests 15.000...
Summary statistics for returns on two stocks X and Y are listed below. Mean 5.81% Stock X Stock Y Variance 0.004000. 0.007000 3.11% The covariance of returns on stocks X and Y is 0.002100. Consider a portfolio of 10% stock X and 90% stock Y. What is the variance of portfolio returns? Please round your answer to six decimal places. Note that the correct answer will be evaluated based on the full-precision result you would obtain using Excel. igation tips
Most questions answered within 3 hours.
-
For Bergson the concept of Being contains less reality than does
the concept of Becoming. True...
asked 53 minutes ago -
What is the hydroxide ion concentration, [OH-], in a solution
with a hydronium ion concentration, [H3O+]...
asked 39 minutes ago -
What species is the reducing agent in the following
equation?
Mg(s) + 2HCl (aq) --> MgCl2(aq)...
asked 54 minutes ago -
A 50g ice cube is taken out of a freezer at 0 degrees Celsius
and put...
asked 2 hours ago -
How do ratios help you determine trends? What specific
information do managers look at? Is there...
asked 2 hours ago -
A wavelength of 514 nm is used to find an unknown diffraction
grating. If the separation...
asked 2 hours ago -
Use the central limit theorem to find the mean and standard
error of the mean of...
asked 2 hours ago -
You will be given a file that will contain averages for classes
which are divided into...
asked 3 hours ago -
A Pew Research Center poll surveyed a random sample 850 voters
and asked them if they...
asked 3 hours ago -
Design a class named
NumDays, to
store a value that represents a number of hours and...
asked 3 hours ago -
(R)-2-chloro-(S)-3-bromobutane and
(S)-2-chloro-(S)-3-bromobutane are: A. enantiomers. B.
diastereomers. C. meso compounds. D. the same molecule.
asked 3 hours ago -
1_ What is the Frank-Starling law of the heart? And why the
heart cannot function on...
asked 3 hours ago