Tutorial 2 Solutions

1. How to compare different assets in investment selection process? 2. What are the quantitative characteristics of the assets and how to measure them? 3. How does one asset in the same portfolio influence the other one in the same portfolio? 4. And what could be the influence of this relationship to the investor’s portfolio? 5. What is relationship between the returns on an asset and returns in the whole market (market portfolio)?

Which of the following are the key factors when determining asset allocation for an investment? I. Time an investor has until he needs to use the money from the investment (time horizon) II. Risk preferences (tolerance for risk) III. Current financial situation   a. I., II., & III.   b. I. & III.    c. II. & III.   d. I. & II.

Can you help me with this please? explanation of the characteristics of investment appraisal decisions and theadvantages and disadvantages of the IRR.

Prepare a detailed analytical report that encompasses the following areas. Nature of investment markets, the Primary and secondary investment markets. Also brief discussion on the money market and capital market providing key differences between the two. Five stages of the investment management process providing key points that will ensure the success of the investment decision.

Explain why risk and uncertainty should be considered in the investment appraisal process.

Which approach to investment analysis is "best" in terms of accounting for both the timing and amount of revenue streams from a potential investment? A.  the payback period B.  the simple rate of return C.   the net present value D. the internal rate of return

While comparing investment returns is an important starting point in evaluating investment performance, it represents which part of the analysis?

What text and supplemental information, is there a best choice for using any one specific method of investment valuation, or do you have more than one?

Which of the following tools is sometimes used to rank investment proposals? 01. 02. 03. 04. 05. Project assessment guide (PAG). Investment opportunity index. Annuity index. Profitability index. Capital ranking index.

The strategy that is used to determine the long-term policy asset weights in a portfolio is called O a. strategic asset allocation. O b. tactical asset allocation. O c. integrated asset allocation. O d. sector rotation. O e. insured asset allocation.

Asset allocation is performed to A) reduce the load that intermediaries charge maximize the earning potential of an B) investment vehicle C) maximize the earning potential of a portfolio protect against significant declines in any D) one investment vehicle O E) maximize the returns from any one vehicle

An NPV analysis is one part of a complete captial investment analysis. What is the second part that must be completed if the first part is positive?

What does it mean that portfolio diversification can reduce risk, and how does the efficient frontier logically fit into this discussion?  include correlation, asset allocation, and asset classes or benchmarks in your answer.